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42577 Views 50 Replies Latest reply: Dec 30, 2013 3:45 PM by catskillscottage RSS
New Member 1 posts since
Mar 11, 2011
Currently Being Moderated

Mar 21, 2011 10:37 AM

Insurance on a vacation rental

We have just listed our Lake home on VRBO, and we called our insurance provider to inform them of a change in status from second home to vacation rental. They told us that they do not insure seasonal rentals, but have an affiliate who does...and when I spoke to the affiliate, they informed me that they could insure it as a rental, but the insurance would not be "in force" if we (the owners) were staying there. I told them it was absurd to think that vacation rental owners never spend some time at their properties, but the insurer was firm in their stance. Has anyone run across this issue?? Do I need to carry 2 separate policies? The home is in Alabama.

  • sfvacationhut Community All-Star 643 posts since
    Dec 31, 2010
    Currently Being Moderated
    Apr 19, 2011 7:07 PM (in response to cacky)
    Re: Insurance on a vacation rental

    Yes, we're having problems getting the proper homeowner's insurance also.

     

    The rules vary based on the insurance provider.

     

    Problems we've come across ..

     

    1) One insurance carrier said they'd carry us if it was a side-by-side duplex with a firewall between the 2 units. However, ours is a 2-unit apartment building, where the 2 apartments are stacked.   (One unit is on the first floor, the other unit is on the 2nd floor.) So ... that made it impossible, it's not in the right configuration, so they won't cover us.

     

    2)  One insurance carrier said they'd carry us if we were doing short-term rentals in a 2-unit building that is stacked like ours ... HOWEVER, they will only cover it if we are Landlords for the whole building.   If we live in one of the units, they will not cover us.  Well, we do live in one of the apartment units, and we rent out the other one full time as a vacation rental.  So they won't cover us.

     

    UGH!

     

    Our home insurance normally costs $1000 per year.   At first our agent could not find anyone to cover us.  But I told him about the ones recommended in the HomeAWay community ... and based on those, he has found us some insurance quotes.  So far, the quotes he has found, are all about $4,000 per year.   That's a 300% increase!  That seems pretty crazy, especially given that our apartment is only 1100 square feet, and the rental apartment is only 490 square feet.

     

    It seems like that quote for $4,000 just can't be right.  But so far, our agent cannot find anything else.  We are coming to our wit's end in the search for proper insurance. 

  • New Member 5 posts since
    Apr 17, 2011
    Currently Being Moderated
    Apr 17, 2011 10:55 AM (in response to cacky)
    Insurance on a vacation rental

    Hi

     

    I have a 3BR townhome on the beach in San Diego, CA.

     

    First of all, there is a really good article on VR insurance in the Community that really helped me. Only thing is, it tells you WHAT to look for, but it doesn't tell you HOW.

     

    In my experience, if you talk to your traditional insurer they will not touch a VR.

    Then I google "vacation rental insurance" and nothing....

    Then I had this AHA! moment and googled "independant insurance agent".

    In a snap, I had 3 local agent's phone numbers in hand, and I was able to get quotes from all of them!!! You have to go with the type of agent that is affiliate with 30 or so different companies, the kind that specializes in finding you insurance for anything.

    For some reason, all 3 different agents presented me with a LLoyd's policy as the lowest priced among their options.

    I bought a very comprehensive policy that covers liability, the home's interior, personal property and lost rents for $1,037 a year. Not the $205 I used to pay for traditional HO insurance, but far better than some of the folks are saying.

     

    So I say, know what to look for, shop around, and you will find it!

    • sfvacationhut Community All-Star 643 posts since
      Dec 31, 2010
      Currently Being Moderated
      Apr 17, 2011 9:24 PM (in response to amada)
      Re: Insurance on a vacation rental

      Hello Amada,

       

      Thanks for writing with your information.  I'm sorry to see that you had a 400% increase in the cost of your insurance. I'm also sorry because it makes it sound like our 300% increase in cost, which is what has been quoted for us, isn't so bad.   Only a 300% increase is not nearly so bad as the $400% increase that you got. 

       

      And so ... it sounds like maybe we really will have to pay an extra $3000 for our insurance. 

       

      By the way, I did read the transcript of the podcast, as well as the summary FAQ article that HomeAway created, a few weeks ago.

       

      http://community.homeaway.com/docs/DOC-1358#comment-1707

       

      http://community.homeaway.com/docs/DOC-1357

       

      I forwarded these links, as well as some links to the owner community forums where people were discussing specific companies to use, to our insurance agent.  He is an independent agent, but for whatever reason he was still having the hardest time finding coverage for us.

       

      Maybe for our 2012 bookings, we'll switch to doing leases of six weeks or more.  I believe our agent told us that we could get a regular homeowner's insurance policy if the lease was for at least six weeks.  Paying an extra $3000 in insurance, every year, is a lot for us.

       

      (BTW, in case it wasn't clear ... Our usual homeowner's insurance bill is $1000 per year.  The new commercial policy is expected to be $4000 per year.  We own a 2-unit apartment building.  We live in one, and we rent out the other.  Unfortunately, because the apartments are not side by side (they are flats, stacked on top of each other), and there is no firewall between the 2 levels, we have to pay for the much more expensive commercial policy to cover BOTH units.  Even though, unfortunately and quite obviously .... we are not making any money at all off of the apartment we are living IN.  The apartment we are in is purely a residential property.  So it's a real bummer that we have to pay the commercial rate for both units.)

      • sfvacationhut Community All-Star 643 posts since
        Dec 31, 2010
        Currently Being Moderated
        Apr 17, 2011 9:32 PM (in response to sfvacationhut)
        Re: Insurance on a vacation rental

        Here's what our agent quoted for us.

        This is compared to our usual home insurance which was only $1000 per year. The $1000 per year, from Tower Insurance, covered a 2-unit apartment building, where one unit was lived in by the owner, and the other unit was to be rented out by a long-term tenant. 

         

        There are several quotes that have come in so far, and we are still waiting on Chubb and Fireman's fund to report back to us, and I am hoping to get more competitive quotes from them.

         

        Scottsdale Insurance: $4,225

        Admiral Insurance:      $4,962

        Nautilus Insurance:      $5,053

        Essex Insurance:         $5,280

        Lloyds of London:         $6,216

         

        We did check into American Modern, and they will do some, "Vacation Rental's", but the shortest period of time they were willing to cover was 90 days and nothing shorter.

         

        All of these prices are total amounts, meaning I asked them for their Total Charges after taxes and any fees they may have. These are annual prices.

        • sfvacationhut Community All-Star 643 posts since
          Dec 31, 2010
          Currently Being Moderated
          Apr 17, 2011 9:34 PM (in response to sfvacationhut)
          Re: Insurance on a vacation rental

          Does anyone have any experience with the above companies?

           

          Would you be able to provide advice / guidance on which one is better or more reputable, etc?

          • Currently Being Moderated
            Apr 18, 2011 10:10 AM (in response to sfvacationhut)
            Re: Insurance on a vacation rental

            I am a General Liability Insurance adjuster and have handled claims for all the companies mmentioned.  My personal VRBO property is insured through Nautilus as they were less expensive.  All the carriers listed are considered Excess and Surplus lines carriers--non-standard.  Lloyd's policies have many exclusions, so you need to make sure to read the policy exclusions. Scottsdale is a good company. Also, you can check with James Wolf Insurance, 800 488-1135.  They offer an Innkeeper's policy that might offer less expensive rates. 

        • sfvacationhut Community All-Star 643 posts since
          Dec 31, 2010
          Currently Being Moderated
          Apr 19, 2011 6:31 PM (in response to sfvacationhut)
          Insurance on a vacation rental

          Here is the latest update from our agent.

           

          Interestingly, he says that American Modern, Chubb, and Fireman's Fund, will not cover a rental such as ours.  Our situation is a 2-unit buiding where the owner lives in one apartment (2nd floor flat), and the vacation rental / guest apartment is the other apartment (1st floor flat).  A lot of people in the owner's community say their insurance is through American Modern, Chubb, or Fireman's Fund.  Is our situation so totally different?    Or is our agent giving us the wrong information?

           

          See the information below.  Thank goodness now we are getting a quote of around $2400, which is much more do-able than $4000 (per year).   Foremost Insurance is the provider.  Does anyone know about them, are they a good company?

           

          Thank you!

           

           

          It took alot of time & research, but the contact that referred you to get quotes from, American Modern, Chubb & Firemans Fund, may not have up to date information, as none of those 3 carriers would be willing to cover this type of business. I definitely wanted to get quotes from these 3 since your organization referred them and it was extremely hard to even get them to return a call regarding this.

           

          I was also promised by Farmer's insurance that they have good rates for this type of business, but then I had them quote it, (and I even have friends with Farmers), and they would not do it, but I have good news.

           

          Foremost Insurance will do this and it came back at the lowest quote out of everything we have gotten so far, which is, $2,476 with a $2500 deductible or $2607 with a $1000 deductible. Now this is only with $50,000 of personal property, and I'm sure you want more coverage than this for your personal property protection, so that was why I was asking if you could estimate what you may think you would need in a worse case scenario such as a fire.

          • Currently Being Moderated
            Apr 19, 2011 6:54 PM (in response to sfvacationhut)
            Insurance on a vacation rental

            I have worked with Foremost, and have found them to be very responsive in handling claims. 

             

            I have been in the insurance industry in California for over 30 years.  There are two ways to write your business, one  policy for the structure and the contents and a separate policy for the liability exposure for the tenants, or a policy for everything, structure, contents, and liability.  What type of policy are you being quoted?  Does the quote include coverage for the tenant's belongings if there is a break-in---depends on State Law as to whether you are responsible for their belongings.  Due to the huge differences in premiums, I need to know what coverages are being offerred for the premium dollar.  Allstate insures my home and the Cottage I rent behind my home for $900, and Nautilus provides liability coverage for a minimum premium dollar of approximately $1100.  The premium is based on revenue generated from the Cottage.

            • sfvacationhut Community All-Star 643 posts since
              Dec 31, 2010
              Currently Being Moderated
              Apr 19, 2011 7:00 PM (in response to redbchtrvlr)
              Insurance on a vacation rental

              Thanks so much for the prompt reply.

               

              Glad to hear that Foremost is a good company.

               

              I am forwarding your questions to our agent.

               

              Thank you!

            • sfvacationhut Community All-Star 643 posts since
              Dec 31, 2010
              Currently Being Moderated
              Jun 26, 2011 11:11 PM (in response to redbchtrvlr)
              Re: Insurance on a vacation rental

              Our (independent) agent found us a policy with Foremost Insurance, which is under State Farm (EDIT:) Farmers Insurance.  According to the State Farm (EDIT:) Farmers Agent, "This risk should be written as a 2 family primary as the insured lives in 1 of the units and rents out the other unit as a vacation rental property."

               

              I'm glad that we were able to get a regular homeowner's insurance policy, which our agent said is better for us than a commercial policy.  (One of the apartments in the 2-unit building is our primary residence.)

               

              Whether we have a $500 deductible or a $5000 deductible, the annual premium is approximately $4000 (it's about $3900 if accept a $5000 deductible; it's about $4400 if we want a $500 deductible).

               

              This is a big increase from the $1000 annually we were paying before (with a $2500 deductible).

               

              I don't think there's any way around this, at least not for our case.  The same may not be true for everyone.  I'm still hopeful that we might find some cheaper coverage, eventually.  But in case that's not available, I just want folks to be prepared for some "sticker shock."   

               

              I wonder if we can try passing the cost of this along to our guests?  An extra $3000 per year is an extra $10 per night.   I don't know if we can make that fly, especially in this economy, but we can certainly try.   

    • sfvacationhut Community All-Star 643 posts since
      Dec 31, 2010
      Currently Being Moderated
      Apr 18, 2011 10:32 AM (in response to amada)
      Insurance on a vacation rental

      Thanks for the feedback, redbchtrvlr.

       

      I'm glad to hear that Scotsdale is a reputable company.  Does anyone else have experirence with any of the companies mentioned above?

       

      And amada ... I'm surprised that the normal (non vacation home) homeowner's insurance for a 3-bedroom townhome on the beach in San Diego, California (only $205 annually!), is so much cheaper than what we were paying for a 2-unit building in San Francisco.  One apartment is 490 square feet, and the other apartment is around 1050 square feet ... that's less than 1600 square feet total ... and the regular insurance was costing us $1000 per year. 

       

      I'm surprised that there's such a big difference in price ... for the regular amounts, not even talking about the commercial policy.  San Diego is not a cheap place to live, so I'm sure your beach house is similar in value to our little building with 2 small apartments in it.  In fact, probably your beach house is MORE expensive, and it's more risk for the insurance, too, since it's on THE BEACH, right?  It's strange to me.

       

      Does anyone have an explanation for why the prices could be so different?  Is our agent not finding us the best prices?

       

      If somebody is thinking about San Francisco and the earthquake risk, I don't think that could be the reason for the difference in price. Isn't San Diego susceptible to earthquakes, too?  And besides, our policy doesn't even cover damages due to earthquakes.   When we bought our house, we inquired about earthquake insurance.   (Not for a commercial policy, just regular insurance.)  When we found out it's an additional $8000 per year, we asked around ... and we found out that none of our neighbors have it.  It's simply too expensive to buy.

       

      So when it comes to earthquakes, everyone tries to buy on bedrock, get seismic upgrades, and then hope that their own house doesn't get damaged.

       

      Do any of the insurance experts out there have any advice?

      • New Member 10 posts since
        Feb 24, 2011
        Currently Being Moderated
        Apr 28, 2011 1:43 PM (in response to sfvacationhut)
        Re: Insurance on a vacation rental

        I paid $ 1,100. per year for "InnKeeper" insurance via Tudor but the price went to $ 2,000. per year (on top of my $ 2,300. homeowners insurance policy with Foremost) when I saught very specific coverage for the canoe and paddleboat on our lakefront property which we allow guests to use with safety equipment - and yet the coverage language is still vague and makes you feel unprotected.

         

        I fear that many of the key risks that we as vacation rental owners face are not well covered and would result in legal battles in the event of a problem.

         

        Does anyone out there have any experience with "watercraft" coverage or lakefront property ?

         

        Does anyone use an agent who specializes in coverage of B&B's or vacation rental properties ?

        • Currently Being Moderated
          Apr 28, 2011 1:52 PM (in response to johnlosaltos)
          Re: Insurance on a vacation rental

          James Wolf Insurance, jameswolf.com specializes in Innkeepers coverage.  I am an insurance claims adjuster and I handle primarily excess and surplus lines commercial claims in California.   I'd suggest you read all endorsements/exclusions attached to the policy.  Typically the insurers add an endorsement/exclusion to the policy for the type of risk they want to exclude. The key is to find an agent who is well versed in the type of insurance you require. You may wish to consider obtaining an Umbrella Policy.

          • New Member 10 posts since
            Feb 24, 2011
            Currently Being Moderated
            Apr 28, 2011 2:42 PM (in response to redbchtrvlr)
            Re: Insurance on a vacation rental

            Thanks for your respose ! I have a umbrella policy (State Farm) and purchased my Tudor Policy via JamesWolf.   It has been very difficult to get clear coverage answers from State Farm or James Wolf - everybody hides behind vague legal language.  State Farm's umbrella for example I was finally told covers MY KIDS use of our watercraft but NOT other kids ??? (i.e., it only covers people who won't sue you)

             

            I think you are exactly right that we all need an agent who SPECIALIZES in vacataion rental coverage and who can help owners write their rental contracts to tie to their coverage so they are ACTUALLY protected (for example, what does "legally responsible" actually mean in the language below).

             

            Do you know such an agent ?

             

            4-28-11 watercraft endorsement language.png

            • Currently Being Moderated
              Apr 28, 2011 3:13 PM (in response to johnlosaltos)
              Re: Insurance on a vacation rental

              According to the endorsement, Exclusion G, coverage A,  doesn't apply--what is exclusion G? The endorsement is providing coverage for paddle boats and canoes you own, use, or are rented to you.  In this situation you own the boats and canoes so I think the endorsement is giving coverage back to you. 

               

              With respect to the Umbrella Policy, typically, unless otherwise excluded, if someone is using your property and injured, coverage is extended on an excess basis.  The only exclusion may be a business related exclusion.  The coverage is to protect you, and not necessarily the people using the equipment.  If they run into someone and cause an injury, your policy should protect you as the owner of the equipment, but it won't typically protect the operator of the equipment, their own homeowner's insurance liability policy comes into play.

               

              I find the most knowledgable agents are independent insurance agents.  The State Farm agent's knowledge is limited to the State Farm policy.

               

              What state are you in?

    • New Member 1 posts since
      Oct 3, 2012
      Currently Being Moderated
      Feb 6, 2013 6:28 PM (in response to amada)
      Re: Insurance on a vacation rental

      I am in san diego can you tell me who you worked with? I would appreciate it

      dochock

  • george.grafer New Member 1 posts since
    May 9, 2011
    Currently Being Moderated
    May 9, 2011 3:48 PM (in response to cacky)
    Re: Insurance on a vacation rental

    You want to contact Marlene Esparza with Propel Insurance.   Her number is 206-262-4348.   She was able to provide me with a policy comparable to what my premium was when I had it as a second home.

    • New Member 10 posts since
      Feb 24, 2011
      Currently Being Moderated
      May 15, 2011 12:12 PM (in response to george.grafer)
      Re: Insurance on a vacation rental

      Thanks, George ! I just left Marlene a message ! ... John

      • New Member 10 posts since
        Feb 24, 2011
        Currently Being Moderated
        Jun 4, 2011 5:30 PM (in response to johnlosaltos)
        Re: Insurance on a vacation rental

        I got a great price quote from Marlene (thanks, George !) of roughly $ 1,000. which is about half what I am paying now for two vacation rentals including one on a lake with lake, canoe and paddleboat risks.   However, I don't know much about the insurance company providing the coverage (Century Surety Company).

         

        Has anyone had experience with Century Surety Company ?

         

        By the way, Marlene Esparza, who George recommended is very responsive and answers my coverage questions quickly and directly.

        • sfvacationhut Community All-Star 643 posts since
          Dec 31, 2010
          Currently Being Moderated
          Jun 5, 2011 11:39 AM (in response to johnlosaltos)
          Re: Insurance on a vacation rental

          John, I'm glad to hear you got a good quote on the insurance.

           

          Unfortunately I believe I contacted Propel Insurance and left them a message, back in April, when I was trying to get this all straightened out, but I never heard back from them.

           

          We ended up booking a policy with Foremost .... the annual homeowner's insurance policy premium for our 2-unit building (which we live in) went from $1300 per year to $4300 per year due to the idea that we would be renting one of the apartments as a vacation rental, instead of on a long-term tenant basis.

           

          I will leave a message for Propel again and see if I can get a better rate.

           

          The extra $3000 per year is a major ouch-y.

        • sfvacationhut Community All-Star 643 posts since
          Dec 31, 2010
          Currently Being Moderated
          Jun 5, 2011 11:46 AM (in response to johnlosaltos)
          Re: Insurance on a vacation rental

          John,

           

          Do you think this is the web site for Century Surety?

           

          http://www.meadowbrook.com/century/

           

          If this is the right company, this might apply to you:

           

          http://www.meadowbrook.com/century/CommercialProperty.html

           

           

          Hopefully Red Beach Traveler will write back, as he/she always seems very knowledgeable on these things!

        • Currently Being Moderated
          Jun 5, 2011 3:51 PM (in response to johnlosaltos)
          Re: Insurance on a vacation rental

          Sorry John, out camping with my girl scout troop this weekend.  I have done work with Century Surety.  They are an excess & surplus lines carrier and the service is similar to other  E & S carriers, too include Nautilus.  My Nautilus policy is up for renewal and I am actually changing carriers.  CBIZ Insurance Services, formerly James Wolfe, is now offering a Commercial General Liability policy for innkeepers.  If your structure is already covered, they will write a liability policy.  The benefits:  low premium(my case $906), coverage specific for innkeepers( coverage for the theft of guest's belongings, coverage for advertising issues, liquor liability), and CBIZ only writes coverage for innkeepers, i.e. they know their stuff.  In comparing my Nautilus policy(standard E & S policy) to the CBIZ policy, CBIZ is a perfect fit for our small business.  Plus they have adjusters who deal with our specific issues, rather than a standard E  & S  carrier who writes many different types of business.  The standard E &S will be more likely to deny coverage if they get the chance( and this is from an adjuster who knows the game.)  Call Bill Carr, 800 488-1135, or bill.Carr@cbiz.com--and he isn't paying me--I am just impressed with what they offer.

          • sfvacationhut Community All-Star 643 posts since
            Dec 31, 2010
            Currently Being Moderated
            Jun 5, 2011 4:49 PM (in response to redbchtrvlr)
            Re: Insurance on a vacation rental

            Hurray, Red Beach Traveler!  (Or at least that's what I am imagining for the meaning of your redbchtrvlr ...)

             

            Always good to hear from you.

             

            I will check out this new info you have provided.

             

            Our policy with Foremost covers our own belonging / business belongings in the guest apartment, but it does not cover the guests' belongings in the event of burglary / theft.  It would be great if we found a policy that was specially for innkeepers, as you say.

             

            The only problem is, it might not be available to us because we live in the same building.  I will check on it.  Thanks for the leads!

            • Currently Being Moderated
              Jun 5, 2011 5:00 PM (in response to sfvacationhut)
              Re: Insurance on a vacation rental

              Our cottage is behind our residental home in Redondo Beach, CA.  We did not wish to replace our Homeowners Policy, as we'd lose our multi-policy discount on the Auto Policy.  Hopefully this option will work for you. I have had good experience with Foremost, but they are not innkeeper specific.  Good luck     Redondo Beach Traveler

          • New Member 10 posts since
            Feb 24, 2011
            Currently Being Moderated
            Jun 23, 2011 5:27 PM (in response to redbchtrvlr)
            Re: Insurance on a vacation rental

            Thanks, Red Beach - I have Cbiz now with a Tudor Insurance policy they provided me.  Will ask about the Commercial General Liability option.

            • sfvacationhut Community All-Star 643 posts since
              Dec 31, 2010
              Currently Being Moderated
              Jun 26, 2011 11:26 PM (in response to johnlosaltos)
              Re: Insurance on a vacation rental

              I have some updates.

               

              I contacted Marlene Esparza with Propel Insurance.  She was very good at answering my questions and very helpful over the phone.

               

              Marlene says that the insurance package they offer is a group plan, and it's commercial insurance.  It covers the building for problems like fire, flooding from leaking appliances, rioting / looting, etc.  Hoewver the policy does not protect our belongings or the guests' belongings from theft.

               

              The deductible for this insurance is $2500.  I don't think the deductible can be variable, since it's a group plan and everybody has the same yearly renewal date (I believe it's December 17), etc. 

               

              The policy was about $1900.  This is much cheaper than $4100, which is what the price for our current policy would be, if it were to have a $2500 deductible.  Our current policy is under Foremost Insurance, and it has a $1000 deductible for an annual premium of about $4300.  It is a homeowner's insurance policy and provides us with all the usual benefits of home owners, including protection from theft.

               

              According to Brenda Slater of Foremost Insurance (which is apparently owned by Farmers Insurance), our current policy is written as follows:

               

              "This risk should be written as a 2 family primary as the insured lives in 1 of the units and rents out the other unit as a vacation rental property."

               

              So!  I really like the new price tag of $1900 (for the Propel Insurance Vacation Rental Group Plan, Annual Premium) versus $4100.  The main problem is that it would be commericial insurance for a 2-unit building that we live in as our primary (and only!!!) home.  And that means we would no longer have homeowner's insurance. This means that we would no longer have protection for our own belongings.  If something gets stolen from our car, or if things get stolen from our own home, or from a vacation rental in some other place where we might be traveling, we'd be out of luck, no insurance.

               

              I asked Marlene Esparza if we could buy renter's insurance to protect our own belongings.  She is checking into it, but she hasn't found an answer yet.

               

              I'm wondering ... is there anyone here who knows the answer?  Do any of you have commercial insurance on your vacation rental buildlings, and yet you live in the one of the apartments?  In that case, how do you get insurance for your own belongings?

               

              Thank you!

              • Currently Being Moderated
                Jun 27, 2011 1:55 PM (in response to sfvacationhut)
                Re: Insurance on a vacation rental

                Have you checked with Cbiz Insurance yet?  They can insure the structures, your belongings, and provide liability coverage.

                 

                Is the Propel premium for the full year? What is the premium based  on?  If the other policyholders have a lot of claims, will this increase the premium, or result in cancellation of the policy ?  Does the policy provide liability coverage for both premises--if not, run as fast as you can from this coverage.  Remember you get what you pay for!

                 

                 

                Personally I believe you need a Homeowner's policy.  You are trying to piecemeal coverage, which could result in your being left bare in certain areas.  An example, if your primary home catches fire, and you need somewhere else to stay, your homeowner's policy provides Additional Living Expense which will take care of your new lodging.

                • sfvacationhut Community All-Star 643 posts since
                  Dec 31, 2010
                  Currently Being Moderated
                  Jun 29, 2011 6:26 PM (in response to redbchtrvlr)
                  Re: Insurance on a vacation rental

                  Hello again Redondo Beach Traveler!

                   

                  Thanks for your always very helpful advice.

                   

                  I have been contacting CBIZ (Bill Carr / Jim Wolfe), kept missing the office hours on the east coast.  Today I sent an e-mail, maybe that will get through better than the voice mail.

                   

                  I am attaching the brochure that goes with the Vacation Rental Group Plan offered by Propel Insurance, through Century Surety.

                   

                  I asked Marlene your questions.

                  She said the only thing shared about the Vacation Rentals Group Plan is that they share the policy number and the renewal date (December 17, 2011).  I think she said one other thing similar to that, but I forgot.    She said that other than that, the policies are all individual.

                   

                  The group plan has been in place since 2004.

                   

                  Since December last year, they have only had a couple of claims, I think she said.  She also said that last year (I think she means before December 2010), they had lots of claims for water damage.

                  Therefore, they added a $10,000 water damage deductible, in order to prevent having to increase the premiums.

                   

                  It has a $2500 deductible for other things, I think.

                   

                  She said it is insured by Century Surety and they're A- rated.

                   

                  The premium is based on our building value, contents and business income, value of separate structures.

                   

                  The vacation rental premium covers one year of Business Income in the event of loss of use of the building.  So, for example, if the building burns down ... we would get one year worth of income that we normally would have expected to have had from our business.

                   

                  The insurance covers loss of vacation rental property (not the stuff belonging to the guests) in the event of fire, flooding from leaking appliances ($10,000 deductible, however!?!), etc.

                   

                  The vacation rental group plan does not cover our own property in the event of fire, etc.  And it does not cover "loss of use" for us, if we need a place to stay, in case our house burned down, etc.  And it does not cover personal liability for us ... like if we are out riding a bicycle and happen to run over a pedestrian and were to get sued for it ... or if we were to have some other sort of negligence (not related to the vacation rental) and get sued for it ... for example, if one of our friends were visiting us in our apartment and were to slip and fall and injure themselves and sue us for it ... etc.

                   

                  SO ... that's why I asked Marlene, can we get rental insurance for this, to cover our own belongings in the event of fire or theft, and to cover our own personal liability, in case of our own negligence, etc?  Marlene got back to me about that today. She said the answer is YES.

                   

                  Safeco insurance will provide us with a Renter's insurance policy that will cover our belongings and will give us $500,000 personal liability insurance, and also will cover us 24 months loss of use.

                   

                  The annual premium cost of the Safeco renter's insurance is $290.00.

                  The annual premium cost of the Century Surety Vacation Rentals Group Insurance plan (which covers the entire building structure, both units, including the one that we live in) is $1912.00. 

                  So the total comes to $2202.00.

                   

                  This is a savings of $1900 per year, compared to $4100 that we would had before, if we had gotten the Foremost policy with a $2500 deductible.  (The Foremost policy we actually purchased was $4300 annual premium with a $1000 deductible.)

                   

                  The only difference I can see (anyone, please out anything I have missed) between the two policies is this:

                   

                  The Foremost policy reportedly (according to my agent) covers THEFT of the vacation rental property (the furnishings we have purchased) from the vacation rental unit.  The Vacation Rental Group plan does not cover theft of the vacation rental propoerty. According to Marlene, our renter's insurance will cover our own personal belongings for theft, but it will not protect from theft, any of our belongings that we keep in the vacatation rental unit.

                   

                  So then the question becomes ... is it worth an extra $1900 per year to insure the vacation rental furniture, etc, from theft?

                   

                  And .. is there anything I have missed in the comparison, etc?

                   

                  I will get back to you with more info when I hear back from CBIZ.

                   

                  Thanks again for your help, RBT and the others posting here.

                   

                  Don't forget to check out the attached file, for the Vacation Rental Group Plan brochure.

                  • Currently Being Moderated
                    Jun 29, 2011 9:34 PM (in response to sfvacationhut)
                    Re: Insurance on a vacation rental

                    I read the pamphlet and I have two concerns:

                     

                    1.  No coverage for property locations used as a primary residence

                     

                    2.  This is a Broad Form policy---it is not All Risk.  Most Homeowner's policies are All Risk.

                     

                    If I understand you correctly, they propose to write both dwellings under the Propel policy.  How do they plan on getting around the exclusion there is no coverage for your primary residence?  I'd insist on seeing the exact policy language.  Note the warning  at the bottom of page 2 concerning the pamphlet is for informational purposes and you should read the policy contract.  

                     

                    A Broad form policy covers the following losses:  Fire, Lightening, Explosion, Windstorm or Hail, Smoke, Aircraft or Vehicles, Riot or Civil Commotion, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Breakage of Glass, Falling Objects, Weight of Snow, Ice or Sleet.  In order for a loss to be covered, it must be a named peril.  I can give you an example of a claim I am handling, and their is no coverage as it is not a Named Peril.  A tenant died in the unit, leaving bodily fluids and an odor.  The owner of the property is going to have to pay the clean-up costs as Dead Body is not a named peril. A Broad Form policy is not the optimal choice for insurance coverage.

                     

                    I think this agent wants to sell you a policy, whether it fits your needs or not.  You ask about the additional cost, well if the amount you pay Propel doesn't buy the coverage you need, you are throwing away your money.  Better to spend the money on a product that could someday save your assets. 

                    • sfvacationhut Community All-Star 643 posts since
                      Dec 31, 2010
                      Currently Being Moderated
                      Jun 30, 2011 12:48 AM (in response to redbchtrvlr)
                      Re: Insurance on a vacation rental

                      Thanks, once again, RBT.

                       

                      I e-mailed Marlene about these concerns and will see what I hear back.

                       

                      I'll also try contacting CBIZ again tomorrow.

                       

                      It seems everyone has been telling me that $4300 sounds like a really high number for insuring a building consisting of just two very modest, small apartments ...but hopefully we can find a more comprehensive insurance.

                       

                      As you say, there's no use paying for the insurance AT ALL if doesn't provide the right coverage ... you could be paying for something and then ... when it's time to make a claim, you could find out that it's basically void, due to some sort of exclusion.  Then you'd know you realy threw money down the drain.

                       

                      Right now we can just takei it slow and investigate any and all options ... since we are currently covered by Foremost homowner's policy, which seems pretty good.  The only drawback is how expensive it is! 

                       

                      We didn't expect our annual premium to jump up by $3000 (from $1300 to $4300) just because the downstairs apartment is rented as a vacation rental instead of as a long-term rental  It seems like a long-term renter is just as likely as a vacation rental guest to have an accident in the kitchen and burn the house down .... so I'm not sure why there had to be such a big jump in cost for insurance.

                    • New Member 2 posts since
                      Jul 14, 2011
                      Currently Being Moderated
                      Jul 14, 2011 3:11 PM (in response to redbchtrvlr)
                      Re: Insurance on a vacation rental

                      There seems to be some confusion with the insurance Propel is providing for Short Term Vacation Rentals. Hopefully, this will help. 1.Propel’s Insurance Program uses a Commercial General Liability and Commercial Property Policy. 2. The Commercial Property Form is Endorsed with the “Cause of Loss - Special Form” Endorsement meaning Losses are covered unless they are specifically Excluded. It is not “Named Peril”. The Special Form covers both Building and Business Property (Contents) and the Loss Settlement for both is Replacement Cost Value. 3. Propel’s Vacation Rental Program was created to help Vacation Rental Owners find insurance protection that personal lines insurance companies don’t want to insure.  As this Blog suggests, it is a huge issue and concern to these owners. When you purchase a Homeowners policy through a personal lines company and do not disclose how the residence is being used, when you have a loss, the company may use the “Misrepresentation” clause in the contract to deny coverage. I am not saying this happens often, but the point is…it could.  One thing is for sure, the company will cancel your policy when they gain knowledge of this exposure. 4. Price…Why is it so much?  The reason personal lines companies don’t want to insure short term rentals is that the Risk of Loss is much higher and it is Less predictable. These properties have a lot of people traffic. People that are unfamiliar with the appliances (stoves, wood stoves, etc), the grounds, and so on. If someone gets injured while on your property, they are likely to try to find owner negligence and pursue a lawsuit. In addition, people that do not own the property are typically harder on the property. I could go on and on but I’ll save you the pain. I am more than happy to answer any other questions.

                      • sfvacationhut Community All-Star 643 posts since
                        Dec 31, 2010
                        Currently Being Moderated
                        Jul 14, 2011 4:45 PM (in response to propelnvra)
                        Re: Insurance on a vacation rental

                        Thanks for the reply, Propel-NVRA.

                         

                        My post might have been a bit confusing as I was comparing the price of the Foremost Insurance I have (which seems WAY TOO expensive at $4300 or $4100) vs. the Propel NVRA Commercial Insurance + Propel / Safeco Renter's insurance, which I find to be quite reasonable, for a total of $2200.

                         

                        So ... while I was complaining quite loudly about the prices for the insurance offered by Foremost ($4300), I was quite happy with the $2200 price tag offered by Propel.  Perhaps that happiness didn't shine through strongly enough! 

                         

                        The question I had then, was, would this be "good enough of a solution" .... since the Foremost insurance is a "comprehensive" homeowner's insurance while the Propel NVRA Commercial + Propel Safeco Renters programs are "piece-meal" as Redondo Beach Traveler warned. 

                         

                        But .. it seemed that the NVRA + Safeco option covered everything, ma's o menos ... except for theft of our own belongngs (our business property ... TVs, sofas, etc) which are located in the vacation rental apartment.

                         

                        So Propel-NVRA ... can you confirm whether this is true or not?  Does the Propel-NVRA policy NOT cover theft / burglary of our busines property, from the vacation rental apartment?

                         

                        Thanks so much for participating in the discussion.

                        It's great to hear from you directly so we make sure to have the 100% correct information.

                        Thank you!

                        • New Member 2 posts since
                          Jul 14, 2011
                          Currently Being Moderated
                          Jul 15, 2011 1:01 PM (in response to sfvacationhut)
                          Re: Insurance on a vacation rental

                          You are correct SFVACATIONHUT,

                           

                          There is an exclusion for theft of business personal property in this program. One thing to keep in mind is that this program was developed to accomodate this exposure and we have been making changes all along based on what our clients need, the policy and underwritting guidelines are not set in stone and many changes can be made.

                           

                          We feel that covering the most important aspects of your investment property and liability exposure outweigh the theft exclusion. We are glad to answer any questions and concerns you might have in regards to this coverage.

                           

                          Thank you.

  • New Member 2 posts since
    Jan 25, 2012
    Currently Being Moderated
    Jan 25, 2012 5:00 PM (in response to cacky)
    Re: Insurance on a vacation rental

    I'm new to VRBO and just got a call back from my insurance agent after telling her I was going to start renting my primary home in Galveston for short term vacationers. I don't mind so much that my home owner's policy cost will almost triple (I was prepared after reading the posts on this site) - but there's no coverage for theft, for the contents, whatsoever!!  That's obviously insupportable, and I need to explore elsewhere. I already have separate policies for flood (FEMA) and TX Windstorm which doesn't change. But I need a policy that has liability coverage, AND theft, as well as fire, etc. I wrote down the names of insurers as I read through the posts. Any specific help would be appreciated. There are a lot of companies, and the TX gulf coast is problematic.

    • bend2011 Contributor 163 posts since
      Apr 28, 2011
      Currently Being Moderated
      Feb 28, 2012 11:31 PM (in response to bluebonnet)
      Re: Insurance on a vacation rental

      State Farm has a policy which covers contents as well as incidental damages.  The cost was nearly the same as my previous standard policy.  Do not overpay for VR insurance!

       

       

      Lara

      www.alluringbend.com

      • bend2011 Contributor 163 posts since
        Apr 28, 2011
        Currently Being Moderated
        Mar 5, 2012 12:13 PM (in response to bend2011)
        Re: Insurance on a vacation rental

        Sandie Mckinley

         

        541-389-4227

         

        Lara

        www.alluringbend.com

      • alabamalake New Member 7 posts since
        May 29, 2012
        Currently Being Moderated
        Aug 11, 2012 4:51 PM (in response to bend2011)
        Re: Insurance on a vacation rental

        I am SO confused! I've read tons of posts stating that State Farm DOES NOT cover short term rentals, then see your comment saying otherwise! I have a 2400 sq ft lake home that we do not live in. We just recently started the VR thing and contacted our State Farm agent to change it over for such....meaning coverage of short term rentals. He assured us that the new policy would INDEED cover short term. But, like I said, I've seen NUMEROUS posts on here that state that State Farm doesn't cover short term AT ALL......UGH....Any and ALL help would be very much appreciated. Thank You so much in advance!

        • msdebj Senior Contributor 1,353 posts since
          May 25, 2011
          Currently Being Moderated
          Aug 11, 2012 4:30 PM (in response to alabamalake)
          Re: Insurance on a vacation rental

          You have to do a lot of research when it comes to insuring your VR home. There are many mitigating factors. Some companies don't even offer basic coverge in certain coastal areas. Windstorm, etc. coverge is often another level of coverage.  Umbrella policies often become  useless in short term rental homes. Most policies do not cover flood damage.

           

          If you are looking to protect yourself from liability (guests falling down the stairs, etc.)  you MUST do you due diligence, and learn to read your policy options well, or hire someone independent who can. 

           

          I hate to say it, but I know people who've been caught with their pants down if they filed claims in certain areas, even when they thought they had full coverage. ( Was it the wind that caused the flooding, as in a storm surge,  etc.)

           

          I know along the Gulf coast many insured home owners had to got to court to get coverage for damages.

           

          Good luck!!

          Debj 

        • sage Community All-Star 965 posts since
          Jul 4, 2012
          Currently Being Moderated
          Aug 11, 2012 5:44 PM (in response to alabamalake)
          Re: Insurance on a vacation rental

          Many insurance agents who deal primarily in personal lines of insurance are unaware of the needs of vacation rental owners.  Even if one relies on the word of the agent, unless the coverage is in writing one may have an unpleasant surprise in the event of a claim.  There are horror stories about owners who relied on their local agents.  My policy includes a rider entitled 'Owners Rental to Others' for which there is an additional listed premium.  Unless you are certain you are covered, I would suggest that you ask the agent to point to the section in your policy that covers you or to give you a signed letter confirming that your policy covers you for short term rentals, or pay an attorney as Debj suggests to review your coverage.

  • umy888 New Member 4 posts since
    Apr 4, 2012
    Currently Being Moderated
    Aug 29, 2012 12:30 PM (in response to cacky)
    Re: Insurance on a vacation rental

    EVERYONE IS MISSING THE POINT ON THIS!!!  Once you get the commercial policy, then what do you do about insuring your boat, car, motorcycle, and most important another house or Umbrella policy???  You other insurance policies will increase due to the fact that you don't have all of your other property with just one agent for a discount.  Then, how do you lump all your property together with an umbrella policy?  You need to look at how taking away your primary residence affects everything else you insure.

    • msdebj Senior Contributor 1,353 posts since
      May 25, 2011
      Currently Being Moderated
      Aug 29, 2012 3:24 PM (in response to umy888)
      Re: Insurance on a vacation rental

      I'm not missing any point at all. My primary residence is in another state from my VR. The insurance company that insures my primary home & vehicles does not offer any type of home insurance in the state where my VR is located. 

       

      If your VR is located in certain states you have to be very careful when choosing coverage. In certain coastal states you'll need seperate policies for Windstorm & Flooding, and  a VR rate. There is NO one size fits all!

      Do you home work!

      debj

    • sfvacationhut Community All-Star 643 posts since
      Dec 31, 2010
      Currently Being Moderated
      Feb 7, 2013 1:24 AM (in response to umy888)
      Re: Insurance on a vacation rental

      Oh wow, I was just looking at this thread.

      After providing all of these details about my trials and tribulations ... it looks like I never updated you guys on the company I went with.

       

      It was .... CBIZ!  When I finally got a hold of the guy (the main problem was the difference in time zones), he was very knowledgeable and thankfully we were quoted for ... can't remember the exact number, but it was about $2400 per year for the comprehensive innkeeper's insurance program. 

       

      CBIZ has a policy that assumes you live in the same building where you do short-term rentals, and so it provides a real homeowner's insurance, in addition to the short-term rentals.  So far it seems to be the perfect solution for us!

       

      Another interesting thing ... apparently HomeAway caught wind of this, because about a year after all my pain and sufferig, trying to find decent insurance ... they actually started partnering with CBIZ to offer insurance for vacation rental operators.  And promoting this on their web site!  Ahh, if only this had been there sooner.  Think of the trouble it would have saved me. 

       

      Check out some info here.

       

      HomeAway Presents First-of-its-Kind Insurance Product Tailored for Vacation Rental Properties

      http://www.homeaway.com/info/media-center/press-releases/2012/homeaway-assure

       

      HomeAway Assure: A CBIZ Insurance Program

      Protect your vacation rental business

      Comprehensive insurance that replaces your homeowner's policy

       

      http://www.cbizspecialtyinsurance.com/HomeAwayAssure

      • catskillscottage New Member 5 posts since
        Dec 30, 2013
        Currently Being Moderated
        Dec 30, 2013 3:45 PM (in response to sfvacationhut)
        Re: Insurance on a vacation rental

        Just want to add to sfvacationhut's post...I too had a wonderful experience with CBIZ. I have already recommended to several other friends and colleagues who have vacation rentals. Here's my story and some bits of advice so perhaps others can avoid the mistakes I made and potential pitfalls!

         

        We converted our cottage in the Catskills to a vacation rental this year, and had a heck of a time finding appropriate insurance coverage. The problem is that most big insurance companies don't know how to assess risk on a vacation rental--they only know how to do it on a year-round rental. The result? A big insurance company that doesn't specialize in vacation rentals may offer you the coverage, but they will charge you 2x to 3x MORE because they don't know how to manage/gauge the risk.

         

        This is an important distinction, so you need to make sure the insurance company you are considering asks YOU the right questions. A proper vacation rental insurance company will ask you questions like:

        • Do you have a property manager? (BTW, don't freak out about this--it can be the local handyman. You just need to have someone who can check the house after each party leaves to make sure there's no damage or other things that you want to know about right away
        • Are post-stay inspections performed after each renter's departure?
        • How long after check out is the inpsection performed?
        • Does the post-stay inspector confirm that windows and doors are locked?

         

        If they're not asking questions like these, they don't know what they're doing. Also, the big companies may put an inexpensive "occasionally rented" rider on your regular primary policy. This does NOT cover you if a guest slips and falls and sues you. You need to make sure you are covered from a liability standpoint. And BTW, personal umbrella liability policies do NOT cover you for vacation rentals because a vacation rental property is considered a business.

         

        Our old homeowners policy when it was a primary residence cost us $1600/year. I asked our existing agent to price it out as a vacation rental--they came back with a different company who quoted us $4100/year. Ridiculous.  Then I called CBIZ (888-883-5696) and spoke to Jamie Kristjanson. Jamie was friendly, extremely knowledgeable, and answered all my questions. And she got it all done the same day--the day before a holiday, no less! The best part is that CBIZ was only $1650/year--basically the same price as my policy when the house was a primary residence.

         

        So I now have an affordable insurance policy with the appropriate amount of coverage that gives me peace of mind because it's designed for vacation rentals. It includes $1million/$2million in commercial liability coverage.

         

        There was a lot of conflicting info in some of these threads when I first starting researching, so I wanted to make sure other owners had this info.

  • New Member 12 posts since
    Dec 19, 2012
    Currently Being Moderated
    Mar 24, 2013 11:35 PM (in response to cacky)
    Re: Insurance on a vacation rental

    I will say thanks to you on this act.I have got experience kinda this so that is why i know about this.Thansk to let us all others know about this.

    Byron Quarter

  • New Member 8 posts since
    Dec 30, 2012
    Currently Being Moderated
    Jan 2, 2013 4:20 PM (in response to cacky)
    Re: Insurance on a vacation rental

    Lloyd's of London offers a 2nd home policy with up to 12 weeks of vacation rental. That is for the original poster FYI It's way lower than commercial rate if 12 wks is enough. It was chosen for us by a great agent who handles a lot of vacation properties. Also for the person in the duplex where you live in one half. since yours is twice as big (unless I am confused you said yours is 1100sf and the rental is 490sf) the 2nd apartment might actually be considered more like a carriage house or in-law suite by some companies and in that case the rules will be different from a true stacked "apartment building" multifam. I say this from my own experience but I already see from another post about State Farm offering great vacation rental insurance, things must be pretty different from one area (state) to the next. State Farm has no vacation rental coverage offered at all to us (Georgia) even though we have our primary residence policy through them. They only do long term leased property they told us. They are great but they do not like risk at all!

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