Property insurance are mostly bought to cover house or other property occupied by the owner, one that can be used only by the family or that can be rented out on yearly basis. However, vacation rentals usually last for a week or even for few nights. Thus, vacation rental insurance is popularly covered as home owner policy. What most people do not know is that homeowner’s insurance policy does not cover rental activities, neither does it covers liability insurance for personal belongings.
What is the most suitable way for protecting vacation rental?
Commercial insurance policy is more comprehensive and effective in covering your rental activity than any homeowner policy. Regular house insurance does not include any kind of part time rental activity as it is usually classified under business activities. Personal liability is a part of homeowner’s policy which excludes activities like charging someone else to live in your house for some time. Personal liability only covers the loss in case someone claims to be injured or affected negatively within your house’s premises, or as a result of some action by your personal actions.
The right annotation for insurance policy, one that is most suitable for rental coverage is called ‘commercial liability coverage’. In case the house rented as a vacation rental is also the owner’s primary residence, various agencies provide homeowner’s policy that combines vacation and personal rental.
Many people think that having an umbrella protection is necessary to cover rental activities. A slight difference between commercial rental insurance and umbrella insurance though, is of personal negligence coverage. An umbrella insurance is only responsible for your personal activity, in case you want rental coverage, changes must be made beforehand. As an owner, one can also insure income coming from renting a vacation house, but is viable only on actual loss sustained. If some owner has multiple properties, he/she can insure up to three different premises using one policy.
It is always best to be up front about who is using your house, so to cover your house and enjoy full coverage. Many insurance companies may create issues out of owner-occupied residence vs non-owner-occupied residence. Many policies do not accept any claim of damage, if you were not present in the house. They sometimes also cancel the coverage, given the house is rented and you do not have commercial rental insurance.
While opting for commercial rental insurance, make sure to understand the language of policy maker so as to confirm that you are covered in all kinds of ambiguous situations. Being an owner, if you have rental insurance, never lie about qualities of your rental vacation house because this might lead to renter making a claim, leading to dropping of your coverage.
In many cases, vacation houses or condos are already affiliated with a master insurance policy. If your house has a blanket policy, it does not means that it covers your personal contents and gives you liability cover. Blanket policies only cover exterior walls and common grounds of your property.