Sounds straightforward, right? You rent a room or your entire property to a guest for a short period of time. However, it’s not quite that simple. Each city or county has varying definitions of what constitutes a “short-term rental property”, and they have different types of licenses or permits you need and other laws that may apply.
In the insurance world, a short-term rental is simply a property that is rented for less than 30 days at a time. Short-term rentals are normally listed on websites like Airbnb, HomeAway, VRBO, and many more.
All homeowner’s policies carry a “business activity exclusion”. In other words, any claim involving a “business activity” could rightfully be denied. Many carriers now offer specific rental endorsements, but they may not address each of the gaps in coverage.
Yes. More and more cities like Melbourne Beach and Raleigh are now requiring short-term rental owners to carry a business license and carry $1,000,000 in commercial liability. They are also putting in requirements for occupancy tax collection, like a hotel, while different types of licenses or permit requirements and other laws may apply. None of these are requirements for a long-term lease rental.
Landlord policies also carry a “business activity” exclusion. Landlord policies are written for landlords, not business owners. A long-term lease rental is not a business. Therefore, the liability falls on the property or business owner.
You buy a business insurance policy. It covers your business property (rental home and contents), business liability, and the business income it generates.
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