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Homeowner's Insurance Rider


#1

Hi All - I am new here and have seen some postings about needing homeowners insurance special rider or endorsements to cover short-term rentals. The last postings on this subject were about a year ago, and things are changing rapidly in this area. I hear rumors that the AirBnB free “Host Protection” and “Host Guarantee” are insufficient. I do not understand the jargon of these policies and need guidance. I have found a couple of companies that offer STR endorsements to homeowners policies including Vermont Mutual and Bunker Hill. I also heard of another called Proper on this site. I am seeking updates 2018 infor mation about this topic!


#2

I don’t quite understand the first part of your post. Nor your comment about rumours.

On it’s website Airbnb makes is clear that it’s guarantee and host protection is not an alternative for home insurance and that it is the responsibility of hosts to ensure they have their own home insurance cover for STRs.

In terms of home insurance - what’s available will depend on where you live. Why not speak to a local broker and see what’s available in your area.


#3

I agree with @Helsi, who I know is not in the US, I am going to assume you are judging from the names you mention.

Insurance in the US is regulated at the State level so you would need to investigate Insurers operating in your State and see which offer Policies covering those operating Short Term Rentals.


#4

Speak to a local insurance BROKER, not an insurance AGENT. Agents work for Brokers. Brokers deal with insurance companies; Agents do not. So much depends on where you live. We’re sort of shafted here in Florida.

I approached Proper last year. Before Air, we paid $1200 a year for ordinary Homeowners Insurance with a “wind damage” rider. Proper came back with an offer of $1500 a year for a Homeowner plus STR policy – without "wind’ rider. They wanted $5000 for just the wind rider!!!


#5

Proper is offering what appears to be a good product for liability/property, but it is much more expensive than my current HO coverge ($2500 versus $1500). I am so conflicted about how to proceed. I am checking into Farmers (Foremost), Proper, and Bunker Hill. Anyone have experience with any of these?


#6

What are you conflicted about. You need home insurance to cover STR. It is more expensive than standard home insurance. It is a cost of doing business and can be offset against your taxes.


#7

I use Farmer’s ( Foremost) Vacation/short term rental policy, I have contacted Proper and CBIZ, both of them are expensive, Proper is a little better than CBIZ. Farmer’s ( Foremost ) is the best one, also I have auto and resident policy with them, I am able to buy 2M umbrella policy to cover all of my vacation rentals. I have not had any claim, but I like their rates. They don’t have vacation/short term rental policy for condo, so I bought through Proper for my condo vacation rental property. The rest properties I have all of them with Farmer’s.


#8

YES, both Airbnb and VRBO offer $1,000,000 in liability coverage for any booking made through their platform. Isn’t that nice of them. What are you really buying when you purchase liability insurance? You are buying a duty to defend which includes attorney’s fees, and if needed a settlement occurrence limit of say $1,000,000. What’s wrong with the FREE insurance that Airbnb & VRBO provide? Your name is not on it and you have no policy rights because you didn’t buy anything. Also, if you read the liability contract(s) there are some major exclusions. If you had a guest that was killed from smoke inhalation as the result of a kitchen fire, from faulty wiring, and you expect to send Airbnb an email, and they are going to send you a team of lawyers, you are not living in reality. There is a reason one of the all time great saying’s is “nothing in life is free”.

To put it another way, if a renter burns your house down, then you send an email to Arbnb support and they rebuild your house? Last time I checked they didn’t have a partnership with Habitat for Humanity. There are dozens of high profile cases where Airbnb Hosts are going public on the fact Airbnb doesn’t guarantee anything in the event of major property damage from a guest, as the claims process is designed to fail. I encourage you to Google “Airbnb Host Guarantee Claims”, and get a few pages deep, and you will find these denials. They are found on news sites and discussion forums just like this one.

The bottom line here is that you need insurance with your name on it.

It’s also important to remember that renting out your home as a short term vacation rental constitutes as ‘business activity’. A typical homeowner’s policy is a personal policy that has specific language to exclude coverage for business activities within the home. Simply having a rider on a personal homeowners policy is fundamentally wrong for a short term vacation rental, since pretty much every homeowner’s insurance policy has what is called a ‘business activity exclusion clause’. This is specific verbiage within the policy that excludes claims coverage when the homeowner is conducting a business within their home. Even if your agency doesn’t cancel your policy, they will most likely deny any claim you might have- Even if the claim has nothing to do with a renter destroying something within the home. The reasoning behind this is homeowner’s policies are personal policies, whereas specific insurance like Proper Insurance (https://www.proper.insure/) is a commercial policy that covers everything you need.

Proper Insurance specializes in short-term vacation rental insurance. They are the ONLY general agent in this field who is a cover-holder for Lloyd’s of London. Their commercial package policy is specifically built to cover you and your guests at your Airbnb. In the insurance world, you get what you pay for and if you want the best coverage, getting backed by Lloyd’s is the only way to go. Definitely worth checking out: https://www.proper.insure/


#9

In addition, here is some information regarding Foremost being ‘the best’ (maybe for price, but you pay for what you get)

Proper Insurance Vs Foremost: The Foremost program is good, but it’s fundamentally wrong for the future growth of short-term rentals and growing regulation. It is a DP dwelling landlord policy that carries premise liability. It is NOT a business insurance policy and does NOT carry commercial general liability. The Proper Insurance® policy is a business insurance policy written on business ISO forms, and does carry commercial general liability.

Commercial insurance is superior to dwelling landlord insurance to begin with, then we add up the Proper Insurance® enhancements, you now have the most comprehensive short-term vacation rental program on the market. A business insurance program specifically written for STR exposure that suffices any and all regulations. A program that covers triple use of the STR property; when it’s rented, when it’s used personally, and when it’s vacant.

Here are a few additional highlights of Proper Vs Foremost: These comparisons were made from a 2017 sample DP3 Foremost vacation rental policy.

The following is a list of things that Proper Insurance®/ Lloyd’s of London PROVIDES, that Foremost EXCLUDES

  • Commercial general liability
  • Personal liability when STR doubles as primary residence
  • Commercial personal and advertising injury
  • Special form all-risk coverage – Personal property
  • Automatic replacement cost – Personal property
  • Automatic Back-up sewers and drains $25,000
  • Actual loss sustained business income with no time limit
  • Automatic ordinance or law – Increased cost of construction
  • Vacancy clause removal
  • Liquor liability coverage
  • Liability continued to amenities off-premise (bicycles, golf carts, etc)
  • General liability continued off-premise (i.e dog bites)
  • Sexual act or sexual molestation coverage
  • Suffice for CGL city STR permit requirement

https://www.proper.insure/


#10

I am no longer in the Business but there are of course many Insurers operating in the Short Term Rental sector, renting Holiday Homes, running a B&B is not exactly a new issue. Both predate AirBnB etc by a very long time.

The issue seems more that people expect to cover running a business in their home under a Household policy and are not willing to pay the premium for what is usually a Commercial risk.

Like everything in life there are grey area, some Household Insurers will often cover incidental Business activities, depends what they are and how extensive they are.

And of course ABB is worldwide so what works in Australia may not in Italy and vice versa.


#11

Hi - All - thank you for your valued input. I bit the bullet and bought
from Proper this morning…hopefully sleep will come more easily now!


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