Key Takeaways
- Proper Insurance identified three warning signs that could signal weak short-term rental insurance coverage
- Cheap add-on coverage, overly simple quote forms and minimal underwriting are among the red flags owners should watch for
- The company says STR owners should make sure policies account for guest activity, property amenities, liability risks and lost rental revenue
A cheap insurance policy and a two-minute quote may sound convenient, but short-term rental owners may want to look a little closer before assuming they are fully covered.
Proper Insurance has released new guidance highlighting three warning signs that an STR policy may not provide as much protection as an owner expects. The company, which specializes in short-term rental coverage, says owners should pay attention to cheap add-ons, quote processes that ask very few questions and policies that require little or no underwriting.
According to news release, the concern is that traditional homeowners and landlord policies were not necessarily designed around the risks that come with a steady flow of paying guests.
Those risks can look very different from property to property. A vacation rental with a pool, hot tub, dock, kayaks or bunk beds presents a different insurance picture than a basic home without those amenities, which is why Proper says the questions an insurer asks during the quote process can matter.
The guidance comes as short-term rental operators already have plenty of property-level details to keep track of, from insurance and safety requirements to rising local registration fees in markets like Flagstaff, Arizona.
Three insurance red flags for short-term rental owners
The first warning sign is price. Proper says owners should be cautious when short-term rental protection is added cheaply to another policy without much discussion about how the property is actually being used.
The second is an unusually simple quote process. A carrier evaluating an STR may need to know more than the home’s size and location. Proper says questions about the listing itself, guest capacity, pools, hot tubs, docks, bikes, fire pits and other amenities can help show whether an insurer is actually evaluating the risks associated with the property.
Related: Florida’s oldest city raises short-term rental fees
The third red flag is minimal underwriting. Proper says owners should pay attention when an insurer does not review the rental listing, ask about safety features or consider amenities that could create additional liability exposure.
That can include basics such as smoke and carbon monoxide detectors, fire extinguishers, handrails and pool safety measures. For operators managing several properties across different markets, including areas like upstate New York, the insurance needs of one property may not necessarily match another.
Owners may also want to check how a policy handles guest-caused property damage, liability claims and lost rental income if a covered loss takes the property offline. Those details can matter just as much as the premium when comparing coverage.
“Taking the time to understand risk exposure and how an insurance policy would respond to these risks is vital for protecting your investment,” Justin Brodin, chief marketing officer at Proper Insurance, said in the release.
