As a homeowner, you want to ensure that your vacation rental is insured against potential risks. Long vacant periods, unnoticed defects as well as the constant coming and going of new guests make vacation rentals more vulnerable to accidents, damages as well as break-ins.
Let’s say a burst pipe in your home causes damage to your neighbours’ property or a guest slips on a broken tile and injures themselves – without the proper insurance in place, this could become very expensive for you.
While most homeowners have either a homeowner or landlord policy, your short-term vacation rental does not fall into this category and requires more comprehensive insurance. A short-term vacation rental is defined as a residential dwelling, which is rented out for periods of less than 31 consecutive days. We have researched the most important types of insurance for your vacation rental, which can be purchased individually or ideally as part of a comprehensive vacation rental insurance package.
The 3 Fundamental Insurance Policies
Building insurance
Building insurance is the most basic insurance policy you should have and is obligatory in most European countries. It insures the exterior of your property against damages from fire, storms, water as well as the theft of building materials. Beyond the physical home itself, building insurance covers any permanent structure on your property like swimming pools, alarm systems, garages and lifts. In some cases, the coverage of special features such as solar panels or jacuzzis may come with an extra charge.
For natural hazards such as earthquakes, floods, storms, fires, or avalanches, a supplementary natural hazard insurance is required. If your property is located in a high-risk area and is more susceptible to elemental damages, we strongly recommend the small extra investment in this insurance.
Tip: If your property belongs to a complex or a house with multiple properties, you should already be covered under a co-insurance policy. Contact your property management to check.
Contents insurance
Contents insurance covers items in your vacation rental which are not fixed to the ground such as furniture, electronic devices and cooking equipment. It insures your belongings against damages from water, fire, break-ins and vandalism and gives you peace of mind when investing time and money into furnishing your property. No need to worry about your expensive, white couch or antique mirror! Be sure to check with your provider whether belongings are also covered during long vacant periods, which are usually regarded as more than 30 days.
Damage by guests can unfortunately happen and is usually covered by the guest’s deposit. However, for extra protection, an accidental damage policy can also be added on for an extra charge.
Tip: Taking valuables out of your vacation rental during long vacant periods may decrease your insurance premiums. Discuss this possibility with your insurance provider.
Liability Insurance
As a homeowner, it is your responsibility to eliminate all sources of danger on your property. However, accidents can still happen and claims from guests or neighbours can become very expensive, very quickly. Liability insurance is a must, as it insures you against third party claims due to personal or material damages on your property.
If a guest suffers personal injury or damage to their property inside your vacation rental, your private liability insurance usually applies. Home and landowner liability insurance is also required in combination with your private liability insurance, as it covers you against accidents caused by your property. This could be the case, for example, if a guest injures themselves on your snow-covered driveway. If your vacation rental belongs to a complex or a building with multiple properties, the latter should already be covered under a co-insurance.
Business liability insurance is required for rentals that are rented out commercially. It offers the same protection as standard liability insurance but also extends to employees such as cleaners who work on your property.
Tip: We recommend regularly checking your rental for faults such as broken tiles. In winter, keep your entrances as well as roofs snow-free.
Optional Policies and Add-Ons to Consider
Each vacation rental is unique and requires a tailor-made insurance. We have researched additional policies along with some extra coverage that you may want to also consider. Enquire with your provider as to whether these are already included in your comprehensive insurance or if they can be added on for an extra charge.
– Employer’s Liability Insurance: This covers employees such as gardeners or cleaners who are not already covered under business liability insurance.
– Legal Expenses Insurance: This covers legal expenses in the case of disputed claims that escalate into a legal battle.
– Travel expenses: This provides you with compensation for any last-minute trips abroad, which arise due to emergencies at your vacation rental.
– Loss of income: This provides compensation due to an inability to rent out your property as a result of damages.
– Cancellation compensation for guests: This provides compensation to guests for cancellations from the homeowner’s side as a result of faults or damages.
Tips For Finding a Suitable Insurance Provider
We recommend looking for a comprehensive vacation rental insurance package, which meets your specific needs. Make sure to take into account the following points when looking for a suitable provider:
– Be honest and provide correct information about your vacation rental. Inform them about potential vacant periods and always provide an accurate estimation of the value of your property and its contents. Incorrect information of any kind may lead to the company refusing to pay out.
– If your vacation rental is abroad, find a provider that speaks your language and can provide you with all documentation in your language. This avoids misunderstandings. Alternatively, we would recommend working with an insurer in your home country to ensure claim settlements run smoothly. This way, the law in your home country also applies.
– Read the fine print and ensure you have a firm understanding of the type and extent of coverage. Shop around until you find an insurance that meets all requirements and covers all the specialities of your property. It is important that you do not leave your vacation rental open to vulnerabilities.
