What should I do with my home insurance for my vacation rental?
If you hate reading, here’s the answer: Call your insurance agent and tell him exactly what you use your house for. Trying to “squeeze things by” will only hurt you, not the insurance company. Want to see if we’re a good fit for your insurance needs? Call us! For those of you that like reading, please read on…
Look at you, Mr./Ms./Mrs. Entrepreneur! You’ve come such a long way. Fifteen years ago, you were having to decide between paying rent or buying those Coachella tickets and assless chaps. Now you own your own home, and you’re the one collecting rent from people who’ve found you on Airbnb. Congratulations! Okay, now that we’re done celebrating, let’s get down to business.
When it comes to insurance, one thing supersedes all else: the policy contract. That’s right, I’m talking about the 30-page document you threw directly into the trash. Many people look at the declarations page, which lists coverage limits, but nobody reads through the list of what types of losses are covered or excluded. Nobody reads what’s considered an “insured premises”. It matters! What if the definition of “insured premises” states that the home cannot be used for “business use,” and the policy defines, in part, “business use” as generating more than $1,500 per year in short-term rental income? If that’s the case, you can have a claim denied, even if the claim is unrelated to the fact the home’s a short-term rental. It’s not fair, but it’s true. By the definition in the policy contract, the home you’re paying to insure doesn’t qualify for their definition of an “insured premises,” which means coverage doesn’t apply for claims arising at that location.
When your insurance agent is asking probing questions, don’t assume he’s trying to find ways to gouge you. Those questions are designed to ensure you are buying a policy that will cover you when you have a claim in the future. Your attempts to avoid hearing, “I don’t think we can help you,” are going to hurt you down the road. If you work with an agent or insurance company that doesn’t have your best interest at heart, it’s time to look elsewhere. Give our office a call. David has offices in Whitefish, MT, Lone Tree, CO and Tustin, CA. He’d love to help!