40 Replies Latest reply: May 13, 2019 11:02 AM by ddpllc RSS

    Another Question About Homeowner Insurance Policy On Rentals

    New Member

      Hello,


      I know this topic has been covered numerous times, but I have questions about obtaining an insurance policy for my primary residence which is also used for VRBO rentals.  I recently received a phone call from my insurance company indicating they will be cancelling my policy in a couple of weeks due to the fact that I'm using my home for short term rentals (FYI, I initially switched to them about 2 years ago because they indicated they 'did allow' short term rentals - I guess insurers are starting to clamp down on short term rentals).  Here is what I have found:


      - My current policy is with Grange Insurance and is approximately $1350 / year.

      - When I obtained a quote through CBIZ, their quote was approximately $2200 / year.

       

      My question is this:

       

      - The VRBO web site indicates that any reservation booked through the VRBO web site is automatically provided by $1,000,000 in primary liability coverage.

       

      Then:

       

      -  I will require that each renter must also sign up for 'property damage protection'

       

      Essentially, between the automatic '$1M liability insurance' and the 'property damage protection', would I have full insurance coverage on my lake front home using for VRBO rentals?  If everyone believes the answer is 'yes', then I will try to go back to my insurance company to see if they can update the policy to state that any rentals are not covered under my Grange policy, but that the third party policies are providing coverage.

       

      Secondly, based upon the above, why would I need to switch to CBIZ if I am covered between the '$1M liability insurance' and the 'property damage protection'?  Is it possible that because most insurance companies will not write any type of exclusion coverage on a policy, i.e. they just won't insure your property if doing rentals?

       

      Any suggestions, comments, etc are welcome.

       

      Thanks in advance!

        • Re: Another Question About Homeowner Insurance Policy On Rentals
          twobitrentals CommunityAmbassador

          The problem isn’t small damage or someone falling down because of a loose brick in a step. It is about your home burning down, blowing down from a tornado, etc. If an insurer does not cover STR and they find out that is the use of your home, probably even while still your primary residence they will reject your claim should something happen.

           

          I Have been frustrated with insurance too, as it seems expensive, but my experience has been that owner occupied is far more expensive than STR right now. The reason is that they don’t have to insure my contents thee same as they would if I lived here full time.

           

          I would just say please read read read so that you are not caught without coverage. I am sure than many just use their regular insurance company, but that could be a costly mistake.

           

          edited because ipad changes my words. Grrrrr!

          • Re: Another Question About Homeowner Insurance Policy On Rentals
            feibus Senior Contributor

            Insurance is state-based... in what state is your property located?

            • Re: Another Question About Homeowner Insurance Policy On Rentals
              sage Senior Contributor

              I found my VR insurance by contacting local agencies that primarily handle commercial insurance. The additional cost to cover short term rentals was modest. Don't forget an umbrella insurance policy with short term rental coverage.

              • Re: Another Question About Homeowner Insurance Policy On Rentals
                ashevillelookout Senior Contributor

                STR insurance is more expensive than LTR or personal homeowner. Don't underinsure.  Sage's recommendation for an umbrella policy is spot on.  We went to an insurance agent who did all of the leg work for us and provided us with three different contracts to choose from.  Insurance for each property was slightly different due to the geographic location and amenities onsite.  Having an agent was terrific, especially when one of the policies was discontinued by the insurance company.  He had a new quote ready for us immediately, and there was no lapse in coverage. 

                • Re: Another Question About Homeowner Insurance Policy On Rentals
                  scowol Active Contributor

                  As others have mentioned, go to an INDEPENDENT INSURANCE (IA) agency.  Independent agents don't work for an insurance company, and they can quote dozens of carriers for your particular needs.

                   

                  I had CBIZ previously and it's a commercial policy, so the premium is ridiculous. I went to an IA who quoted me a few carriers on a Landlord policy.  The price was DRASTICALLY LOWER ($1,877 down to $427.)

                   

                  Landlord policies were originally designed for traditional month-to-month rentals, but my agent found several carriers that would cover my VR business on a landlord policy.  Traditional carriers used to be afraid of VRs, but they are more commonplace.  Per my agent, the data that the smart carriers have collected over time show that the loss ratio on a VR has been no worse than a traditional rental.  So several carriers are starting to offer these on a traditional landlord policy. 

                   

                  My advice to everyone....  Shop.  Shop.  Shop.  Don't give up.  Keep trying.  There's still carriers out there who are not afraid of a VR property and will provide you affordable coverage.  I wish I hadn't thought I was required to go with a commercial business policy as I paid $1,000s more than I needed to.

                   

                  Landlord Insurance Quotes from Independent Agents | Trusted Choice

                  • Re: Another Question About Homeowner Insurance Policy On Rentals
                    New Member

                    Thank you everyone for the quick replies... here are my comments:

                     

                    sonenalpmammoth - Believe it or not, I've had the opposite experience with the Damage Protection Insurance.  I've had to use it twice and both times it was approved and covered no problem (one time was for $700 I think, and another time was for around $3500)

                     

                    feibus - I'm located in Georgia.

                     

                    sage - Yep, I definitely have an umbrella policy in place so that it provides additional coverage on my boat, vehicles, etc.


                    ashevillelookout / scowol - Actually, someone had recommend I use Trusted Choice to find and insurance provider about 2 years ago, so that is how I found Grange Insurance.  Sounds like I will need to 'blast' an email to a few of the providers in my area.  

                     

                    My Grange agent had mentioned possibly 'Foremost' insurance for STR, but I haven't followed up yet.

                    • Re: Another Question About Homeowner Insurance Policy On Rentals
                      New Member

                      hill5185 - I'll definitely ask about loss of business especially since I rented my home 112 days last year.  Good plan about reviewing the HA 1M policy with my agent, however, hopefully I won't need to rely on this now that I'm shopping around again.

                       

                      sage - I'll be sure to ask about liability on umbrella for STR since the umbrella policy is provided by a completely separate company.

                      • Re: Another Question About Homeowner Insurance Policy On Rentals
                        Contributor

                        Check out slice insurance. It's all online. You can turn it on and off per day and it covers your entire home just like homeowners policy, but made for short term rentals. You can turn it on for a week you have rented, then turn it off when the guest leaves.

                          • Re: Another Question About Homeowner Insurance Policy On Rentals
                            New Member

                            Very cool!  I have never heard of this before, but thanks so much for the suggestion.  I guess the question will still be the same as above; would my insurance company still continue to provide insurance knowing that I'm doing STR, even though a third party (Slice, VRBO $1M liability insurance) would be the ones providing the coverage?

                            • Re: Another Question About Homeowner Insurance Policy On Rentals
                              twobitrentals CommunityAmbassador

                              I Just looked this up and it is very interesting......but what insurance do you use in between guests, regular landlord, primary insurance? Does this insurance carrier have issues with the “slice” insurance part of it.

                               

                              I Have to renew in the next few days and am interested in finding any savings I can.

                               

                              thank you for sharing this.

                                • Re: Another Question About Homeowner Insurance Policy On Rentals
                                  twobitrentals CommunityAmbassador

                                  I Just called my regular insurer (not my VR insuer) to see if they would participate in this. The answer was yes, but that I would have to pay for an owner occupied premium to join with the times that slice would be used and it ended up being more expensive that CBIZ. So, looks like CBIZ is going to be getting my business for another year.

                                    • Re: Another Question About Homeowner Insurance Policy On Rentals
                                      Contributor

                                      The way I understand it is you don't need to do anything different with your regular homeowners policy. The Slice insurance becomes your primary insurance when it's activated.  You shouldn't have to pay any kind of owner occupied premium because your homeowners policy wouldn't be liable for anything when you are renting. Only the slice policy would be liable.  That's why it's important to read all the slice documents because if something happens, that's your only insurance.  There was also mention about having to use a "sharing network company" for your rentals. I do recall reading something about that, so yes, if you have someone book direct, you may not be covered.  But the part about having 2 insurance companies battling, that wouldn't happen. Slice is your primary because your regular homeowners policy will not cover you for any kind of business.

                                        • Re: Another Question About Homeowner Insurance Policy On Rentals
                                          twobitrentals CommunityAmbassador

                                          ARe you saying that you only use ”Slice” and have no other insurance company? What I was reading (maybe I misunderstood) was that ‘Slice” was paid their daily fee when you had a guest, but that there was NO insurance other than those times, unless you had another policy. However, I had several companies check out my renewal with CBIZ and nobody could touch it. They all said it was a fantastic Rate for the coverage that they were providing.

                                            • Re: Another Question About Homeowner Insurance Policy On Rentals
                                              Contributor

                                              Sorry, I don't check this board very often. No, you keep your same personal homeowners policy, which doesn't cover when you rent your home out, but enable slice when you have a rental. You don't stop your personal homeowners policy. So, you have your personal homeowners policy, but are renting for the weekend, so you turn on slice for 2 days.  If something happens during those 2 days, slice is the only insurance that will cover any losses, because your personal policy won't cover while you are renting. That's why you need to make sure slice would have enough coverage, because if your house burns down to the ground and is a total loss, slice is all you have for those 2 days. Once the 2 days are up, you turn off slice, and your personal homeowners would cover any issues. I think it came out to $6 a day for me.  Depending on how much you rent, it may or may not make sense.  But could be a good option. For instance, we only rent 8 or so weeks a year. So that's 56 days a year. So slice would cost me $336 a year. A personal homeowners policy would cost $650 a year. A commercial policy would have been $1400 a year. I could have got a personal policy and slice for $998 a year. Which is less than the commercial policy at $1400 a year.  Luckily, I found an Allstate landlord policy that covers short term rentals for $720 a year, but if I didn't, I'd look at slice.

                                      • Re: Another Question About Homeowner Insurance Policy On Rentals
                                        db.meyer Senior Contributor

                                        Slice may work for some owners in some cases.  In doing a very quick read of the linked policy, it implies that only bookings from a "Sharing Network Company" are covered so if you have a direct booking from your website or a repeat guest they likely won't be covered.  For me, even with only a seasonal VR rental, I would not take the risk of coordinating benefits between Slice and Primary Home Owners Insurance as it could result in a battle between the 2 companies over who is going to pay/not pay depending on the circumstances.  I can give examples if interested.

                                         

                                        https://coverager.com/wp-content/uploads/2017/05/Slice-Homeshare-Business-Insurance-Policy.pdf

                                      • Re: Another Question About Homeowner Insurance Policy On Rentals
                                        green_mango Active Contributor

                                        VRBO's $1M liability insurance & PDP are not not not not not not not full insurance coverage.  The VRBO policy protects the guest in case they get injured.  It protects your neighbor's house in case it gets damaged by your guest.  It does protect *your house* in the way a homeowner's policy would.  If a guest burned down your house you'd be out of luck - if the flames scorched your neighbor's house they can claim on the VRBO liability policy.  PDP would help but only up to the max - I recently had a claim for a new double wall oven through a different PDP provider and since it's capped at $3,000 they cut a check for the max - that seems insufficient for a home....

                                         

                                        CBIZ, Proper and Foremost are three well regarded insurers of short term rentals.  For one of my places both Proper and Foremost weren't much more annually than the traditional homeowner's insurance they replaced. 

                                         

                                        As fas an umbrella policy, our personal umbrella policy was cancelled by our agent for our short term rental - STRs were an exclusion.  It's not a STR any longer and we're back to regular insurance, but just something to keep in mind. 

                                         

                                        Also, the big insurers can include lost income which is a nice feature.

                                         

                                        I might give Slice a whirl when it's up and running in Oregon - a nice option for our home we rarely rent instead of switching our homeowner's insurance back and forth....

                                        • Re: Another Question About Homeowner Insurance Policy On Rentals
                                          New Member

                                          Just a quick update for everyone.... both American Modern Insurance and Auto-Owners offer short term rental coverage on my primary residence.  However, I was told by the Auto-Owners agent that the liability from American Modern would not extend to outside of the home.  Meaning if you took your dog to the park and the dog bit somebody and you were sued, American Modern would not cover this.  Of course if the dog bit occurred inside the primary residence, then yes it would cover it.  Auto-Owners would cover both scenarios.

                                           

                                          The price with Auto-Owners was very similar to Grange and provides coverage on up to 180 days of rentals per year.

                                          • Re: Another Question About Homeowner Insurance Policy On Rentals
                                            hangalen7 Contributor

                                            I'm unclear on something. Are we saying that HA's 1 million dollar insurance policy does not cover my home for damages? Catastrophic or otherwise. It is ONLY liablility?

                                             

                                            Also what does "PDP" stand for?

                                            Thanks.

                                              • Re: Another Question About Homeowner Insurance Policy On Rentals
                                                green_mango Active Contributor

                                                Yes that's exactly what we're saying - every person renting their home needs to have a homeowner's policy that covers short term rentals.  The HA policy includes liability and damage to a neighbor's home from your guest, but not *your* home. 

                                                 

                                                PDP  =  Property Damage Protection (an optional product guests can purchase that protects their security deposit - for example I purchase a $49 policy that covers up to $3,000 in damages from guests - but lots of exclusions and very different from catastrophic damage).