The vacation rental market has experienced significant growth in the last several years, and there are no signs of slowing. It is expected to expand by another $57 billion between 2023 and 2028.
While vacation rentals can be a profitable investment, they require a lot of work. They also make you susceptible to various risks. That is why vacation rental insurance coverage is so important.
This article explains the various coverage levels available to you. Keep reading to find out what to look for in a policy so that you can be sure you are protected.
Property Damage Coverage
One of the main threats to vacation rentals is damage from theft or vandalism. Also, guests can cause damage to different parts of the property. This can be intentional or unintentional.
Most vacation rental owners require a security deposit, which is meant to cover such damage. However, the deposit may be insufficient to cover the extent of the damage. Short-term rental insurance will ensure your property is protected from any of the above circumstances.
Keep in mind that there are different levels of coverage. Some will only pay for damage to the building, while more comprehensive policies will cover personal possessions, which could be a valuable addition for furnished vacation homes being rented out.
Coverage for Damage From Natural Disasters
Each year, natural disasters damage roughly one in 10, or 14.5 million, U.S. homes. Insurance policies that protect against natural disasters are a must for property owners.
Homes are vulnerable to fires, floods, tornadoes, and strong winds. Extreme temperatures can rupture pipes, and even the weight of snow can damage roofs and building structures. Having coverage will ensure your home gets fixed in the unforeseeable happens.
Liability is another major reason to have vacation rental insurance coverage. This kicks in if a guest is injured while on the property. This includes an accident, like a trip and fall, as well as a malfunction of fixtures on the property, such as a loose railing.
Vacation property insurance with liability coverage will cover medical expenses incurred by guests. Some policies will also pay for related legal fees. Most importantly, it protects the personal assets of the vacation host who is facing a lawsuit.
Coverage for Loss of Income
For most property owners, a rental property is a business. When it is not operational, you are losing money.
A final category where vacation insurance can offer coverage is loss of rental income. If a property becomes uninhabitable due to damage from storms, vandalism, or other causes, these policies kick in.
These plans typically will bump premiums up. This can be more than worth it though, especially for those whose livelihood is dependent on income from rental properties.
Get Further Help Selecting Vacation Rental Insurance Coverage
Now that you understand how vacation rental insurance coverage works and the protections it can afford, you can find a policy that is right for you. An experienced property management company can further advise you on the best types of policies and coverage levels for protecting your investment.
PMI Vail has access to a nationwide network of real estate expertise, coupled with a local focus. We provide a variety of services, including vacation rental management for Vail and the surrounding areas. Reach out to us today to learn more.