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Vacation Rental Liability Issues

The short-term rental industry is growing by leaps and bounds each year. Homeowners rent their homes out to make some extra money and travelers stay in those homes to experience something new, whether that’s a beach side condo or a home close to bustling city areas. But how can homeowners guard themselves from property damage caused by guests? And how can guests protect themselves with the right amount of insurance coverage while staying in a vacation rental?

If you own a vacation home, it is recommended that you buy rental liability insurance to protect yourself. Vacation rental home insurance policies are designed to protect property owners from liability and to protect the property itself from any issues like wind and fire damage. On the flip side, anyone who rents a property for more than 30 days should purchase a renter’s insurance policy.

There are many vacation rental liability issues that both sides should be aware of.


If you plan to rent out all or part of your home, whether this is your primary residence or not, you have to make sure you’re covered. There are many types of coverage for vacation rental owners like you to consider, with many different types of policies that may work, so you can know you’re getting the right amount of coverage. You can mix and match, too!
But whether you choose one policy or a combination, there are four main kinds of coverage you should have when renting out your vacation home:

  • Liability coverage: This will protect you if one of your guests gets hurt at your property, covering your legal defense if you are sued as well as help pay for their medical bills.
  • Contents coverage: This will protect you if your furniture and other belongings are stolen or damaged.
  • Structural coverage: This will protect you if your home is damaged or destroyed in any way.
  • Lost income coverage: This will reimburse you if the damage to your property results in your inability to rent out the home.

Types of Insurance Policies

  • Homeowners insurance policy: Many homeowners policies provide coverage when you rent your owner-occupied home out, on occasion, with advance notice provided to your insurance company. Perhaps you only plan to rent your home out a couple times a year, such as part of a home swap or during a big event happening in your city, this should suffice provided you notify your insurance company beforehand.
  • Homeowners insurance policy plus rental rider: You may be able to add a rider to your policy that provides vacation rental coverage.
  • Homeowners insurance policy plus landlord insurance policy: You could opt for two insurance policies: homeowners insurance in order to insure the property when you are at the property, and a separate landlord insurance policy to insure you when guests are at the property.
  • Vacation rental insurance: Some companies offer a vacation rental insurance policy that replaces your current homeowners or landlord policy, offering coverage both when your home is occupied by you and when occupied by a guest.
  • Pay-per-use homeshare insurance: This allows you to fill the coverage gap that exists when you rent out your home. You would keep your regular homeowners insurance policy, then pay a per-night fee when you have guests.


If you’re a traveler staying in a vacation rental, you may be curious about your coverage. The liability coverage from your own homeowners insurance policy or renters insurance policy should cover you while staying outside the home. If it’s your deposit or cancellation fees you’re worried about, you can purchase travel or trip insurance for extra protection when booking.


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