What Should Be Covered By Short-Term Rental Liability Insurance?

What Should Be Covered By Short-Term Rental Liability Insurance?

When you first start your vacation rental company, you probably don’t think about visitors burning down the property or jumping over balconies. Still, accidents can happen, and if you don’t have the proper short-term liability insurance in place, an unexpected calamity might put you out of business.

Another reason to ensure your insurance plans are in excellent form before handing over the keys to your rental for the first time is damage brought on by visitors, such as red wine stains on brand-new carpets or a blocked swimming pool filter. Read our article on Airbnb horror tales as well. Not to frighten you away but to make you aware of some strange things that might happen to hosts.

Of course, you may rent for years without experiencing any problems, but even the best of us can have accidents and tragedies, so it’s better to be ready for the day when your good fortune runs out. With all the bases covered, you’ll be able to sleep easier at night.

What kinds of mishaps are possible in your vacation home?

There have also been stories of strange incidents, such as the incident a few years ago when an Airbnb visitor died when a tree trunk fastened to a rope swing at the property collapsed on his head. Other common causes of accidents include slips and falls, electric shocks, and burns. Although we understand that these mishaps may be uncommon, do you want to risk fate?

Bodily harm

You may be held accountable under premises liability law if someone is physically hurt on your property, for example, due to a collapsed stairway, or becomes sick because of anything in your rentals, such as bedbugs or pathogens.

According to this legislation, the property owner is responsible to visitors to eliminate any risks that could result in harm. This would be the case if you, as the owner, willfully caused or permitted a danger to exist. The question is whether you should have reasonably known there was a danger even if you didn’t believe one existed and if you failed to take reasonable precautions to address this matter. This legislation protects your rental guests since they are considered “invitees.”

Several typical reasons for physical harm include:

  • spills or slick terrain
  • deteriorated stairs
  • unfastened or ripped carpets or rugs
  • bad lighting
  • leaks of water

Real Estate Damage

Here, we’re referring to damage to buildings and interior or exterior building-related things. As a result, you can be held accountable if, for instance, a fire breaks out on your premises without a smoke detector and damages your visitors’ belongings like baggage or clothing.

Who is accountable if one of your guests is hurt?

So, please stop with the terrible tales. What can you do in this regard? How can you be cautious and lower the possibility of liability claims that might seriously damage your bank account, if not destroy your business?

Does your homeowner’s insurance cover your rental property?

A homeowner’s insurance policy is often purchased to protect against loss or damage to their house and personal property. This also covers liability insurance if anything happens to a visitor to your house. In other words, if there is an accident at your house, the insurance company will pay the expenses.

Here’s the problem, however. It’s vital to remember that many homeowner insurance plans often exclude or provide little protection if you use your property to operate any kind of company, including renting it out for vacations. This usually applies if you often rent out your home, as owners of vacation rentals plan to do.

Therefore, the best suggestion is to carefully study the terms of your insurance policy contract to determine if the insurer would make a payment in case of an accident involving tenants. If you routinely rent out your home, it may not be feasible for you to pay an extra amount to renew your policy.

A costly alternative would be to purchase a hotel or bed-and-breakfast insurance coverage. Several specialized firms provide liability insurance for short-term rentals. Similarly, your standard house insurance coverage is unlikely to pay out if your visitors cause damage to your property, so you’ll need to take extra precautions.

What level of protection does your hosting platform offer?

Online travel agencies (OTAs) or listing channels have joined the fray over time to provide safety for both hosts and visitors. This is a terrific place to start, but if you read the fine print, you’ll see numerous exclusions and that this normally doesn’t go as far as insurance.


AirCover for Hosts, a feature of Airbnb’s host liability insurance, offers hosts up to $1 million in coverage for negligent accident claims involving injuries or property damage. This includes employees like co-hosts and housekeepers that assist you in running your company.

There are several exceptions and a $1 million maximum per listing location. This insurance is included in the Airbnb hosting fee and is instantly yours as a host. No matter whether you have supplemental insurance or not, it still applies. Read our story on the Airbnb Summer Release, which described improvements to the company’s guest protection policy for recent developments.


For all bookings made online via the HomeAway checkout, Vrbo provides main liability insurance of $1 million at no extra charge to owners and property managers.


You must have sufficient insurance on your property in case a guest is accidentally injured because Booking.com does not provide separate insurance protections for its property owners. You should also ensure that you are aware of and address any hazards that could result in dangerous conditions. For instance, you should act to address and rectify a problem as quickly as you can if a visitor complains about a leaking sink pipe that puts a slipping danger on your tile flooring. Additionally, you should consult your insurance company to see if your coverage is sufficient for the house you want to rent.

Read our post on safety and insurance for Booking.com hosts as well.

Obtain a good night’s sleep.

Therefore, it is obvious that short-term liability insurance should be something to consider and prepare for when you initially start your vacation rental company, regardless of your chosen route. Hopefully, you won’t ever use it, however!

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