Short-term rental insurance

Why doesn’t my homeowners policy cover short-term rentals?

A standard HO-3 homeowners policy is written for one situation: you, living in your own house. Paying guests break it in two places. The policy excludes losses arising from business pursuits, and renting your home nightly through Airbnb or VRBO is a business to nearly every carrier. It also assumes owner occupancy, so a home that sits vacant between guest stays no longer matches the risk the carrier priced. Where that leaves you: an adjuster who discovers rental activity on an owner-occupied policy can deny the claim outright, and the carrier can non-renew you on top of it.

Some carriers offer a home-sharing endorsement for the occasional rental of a room in a home you live in. Short-term rental insurance is a different animal, written from the ground up for a property whose job is hosting guests.

What does a claim look like when the home earns rental income?

When a covered loss hits a rental property, two things take damage: the building and the booking calendar. A proper short-term rental policy is built for both. The property side runs like any homeowners claim (adjuster, scope, repair). The income side is where the specialty coverage earns its premium: loss-of-rents coverage, where the policy includes it, can pay back the booking revenue you lose while the home is unrentable. Expect the adjuster to ask for rental history, platform payout statements or a property manager’s ledger, to establish what the home earns. Owners who keep clean records get paid faster and closer to their real loss.

Honesty at application time matters for the same reason. The policy is priced on rental use being disclosed. A rental claim on a policy that never mentioned renting is the classic denial scenario above.

How do named-storm and hurricane deductibles actually work?

In coastal states, wind coverage usually carries its own deductible, stated as a percentage of the dwelling limit rather than a flat dollar amount. The difference surprises owners at claim time. Say a home is insured for a $500,000 dwelling limit with a $2,500 standard deductible and a 5% named-storm deductible. A kitchen fire costs you $2,500 out of pocket. The same dollar amount of hurricane damage costs you $25,000, because the named-storm deductible is 5% of the dwelling limit, not 5% of the loss. When you compare quotes, the wind deductible percentage is often the biggest difference hiding behind similar premiums. For a rental it compounds: while you fund the deductible, the calendar is dark too.

Does short-term rental insurance cover flooding?

No. Rising water is excluded from just about every property policy, rental or not. Flood is its own layer. The federal NFIP program caps building coverage at $250,000 and contents at $100,000, which falls short of many coastal rental homes. Private flood carriers can write higher limits, sometimes with loss-of-rents coverage the NFIP does not offer, and are often priced competitively. If your rental sits anywhere water can reach (and in Florida, that is everywhere), the flood layer belongs in the conversation from day one. More on the options on our flood insurance page.

When does an umbrella policy make sense for rental owners?

The liability limit on a rental policy typically runs $300,000 to $1 million per property. A serious guest injury, a balcony fall or a pool accident, can exceed that. An umbrella policy adds $1 million or more of liability protection above the underlying policies, and for a portfolio owner one umbrella can sit over every property at once. It is usually the cheapest liability dollar you can buy. If you own more than one rental, re-price an umbrella each year; the answer changes as the portfolio grows.

How should a multi-property portfolio be structured?

Owners with several rentals face choices single-home owners never see. Individual ownership, an LLC per property, or one entity holding all of them. One policy per home or a schedule. Structure affects both liability exposure and premium, and the wrong form can quietly add cost; some corporate ownership forms force a separate commercial liability policy per home. There is no one right answer. It depends on the states involved, the lender requirements, and your tax picture. What we bring is pattern recognition from thousands of these portfolios: ask us which structures carriers price well, and to check that every entity that should be a named insured is one. Property managers running portfolios for others have their own coverage needs; see insurance for property managers.

Where does Fudge write short-term rental insurance?

Fudge Insurance is licensed in all 50 states. The markets where we write the most short-term rental business are the ones thickest with vacation rentals: Florida first, the Smoky Mountain corridor of Tennessee, the North Carolina mountains and coast, and Arizona. Our carrier relationships write STR risk across most of the country. Start with your state:

• Short-term rental insurance in Florida
• Short-term rental insurance in Tennessee
• Short-term rental insurance in North Carolina
• Short-term rental insurance in Arizona
• Vacation rental insurance across the USA

Short-term rental insurance FAQ

Does Airbnb’s AirCover replace short-term rental insurance?

No. Platform protections like AirCover are damage-resolution programs, not insurance policies you own. They run on the platform’s own process and discretion, skip many property perils entirely (storms, a fire with no guest involved, vandalism between bookings), and give you nothing when the home is booked off-platform. Treat them as a supplement, never the foundation.

Can I just keep my homeowners policy and not tell the carrier I rent the home?

That is the most expensive shortcut in this business. Rental activity discovered during a claim investigation is grounds for denial, and carriers do check; listings are public. Disclosed, properly written STR coverage costs more than an HO-3 because it covers a riskier use. An undisclosed rental effectively has no coverage at all.

Is short-term rental insurance more expensive than homeowners insurance?

Usually, yes. The home hosts strangers, sits vacant between stays, and earns income that needs protecting. How much more depends on location, construction, and how the home is used. The spread between carriers is wide, which is why an independent agency that quotes multiple STR markets earns its keep.

Do I need short-term rental insurance for a condo I rent out?

Yes, in condo form. The association’s master policy covers the building shell; the usual fit for the unit is an HO-6-style policy written for rental use, covering the interior, contents, liability, and lost rental income. Ask us to look at the master policy language before assuming where the line sits.

What if I rent the home only a few weeks a year?

Occasional rental of a home you otherwise live in can sometimes be handled with a home-sharing endorsement. A vacation home rented even a few peak weeks a year generally needs rental coverage. Carriers underwrite the occupancy pattern, not the week count.