If you want to begin renting out your property on a short-term basis, there are a few things you need to consider beforehand. One of the most important things to think about before committing to renting out your property is insurance.
As a property owner, you likely already have some kind of insurance…but is that enough? What other precautions should you take before renting out your home on a short-term basis? CuddlyNest has compiled a list of five insurance tips that you should know about as a potential — or current — short-term rental property owner.
1. Your homeowner’s insurance isn’t enough.
Many fledgling rental property owners believe that because they already have a killer homeowner’s policy with their insurance company, that will be enough to cover any incidents with renters. Typically 9.9 times out of 10 this isn’t the case. Most insurance companies have separate policies for home-sharing and consider making money off of your home not to be covered by your insurance.
2. Acting as a “landlord” won’t cut it.
Another common misconception about short-term property renting is that as a property owner you can essentially assume the role of a landlord, just from a short-term perspective. This also isn’t the case.
Many new short-term property owners will draw up something like a “mini lease” that explains their policies, but often these aren’t legally binding as there’s no tenant vetting process.
3. Always talk to your insurance provider beforehand.
You never want to make the mistake of allowing someone to rent out your property, only to find that damages they caused aren’t covered by your insurance because you neglected to contact them about home-sharing policy options.
Contact your insurance provider before you decide to rent out your property and explain the situation to them. Ask if your current policy covers these issues, if they cover home-sharing and, if so, which policy you need to be 100% covered.
4. Document everything.
It never hurts to keep receipts! As a short-term rental property owner or manager, it’s your job to make sure that you document the entire transaction. CuddlyNest can help with some of that, as we act as a go-between by listing your property. Other aspects of the rental, however, are up to the discretion of the owner and renter.
This is especially important if you’re a property manager. You have to constantly be on top of the policies in place by your hosts so that you’re informed.
5. Fill in insurance gaps.
Let’s say that you have a great homeowner’s policy, but it doesn’t cover your home when it’s being used as a vacation rental. What should you do?
Don’t immediately cancel your policy and get another one. Look for other policies and insurance companies that can help fill in those gaps. That’s especially important if your current insurance provider won’t cover home-sharing at all! Insurance providers like GuardHog have policies that complement pre-existing policies so that both owners and renters are protected.
Insurance isn’t just a formality — it’s a necessity. Always consider your current and potential insurance options before you let someone rent out your home.