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The Real Hidden Costs to Owning a Vacation Home Rental

oswaldcompanies December 4, 2017

Renting a vacation home has become a hot trend in recent years. According to,

“37% of vacation home buyers plan to use their property to generate income.”

Websites such as HomeAway and Airbnb have made it easy for homeowners to make a profit when their homes would otherwise be vacant.

Talk to your advisor

Insurance coverage for short-term rentals can be complex and coverage may be restricted under your homeowner insurance policy. Although advertising and marketing are the typical first steps homeowners consider when taking on this business venture, the first step should be to call your insurance advisor. Insurance advisors will make certain the proper liability and property protection is in place, and will point out what coverage restrictions or exclusions to be aware of, resulting from the tenant occupancy of your home.

High risk

With the turnkey nature of a short-term rental, risk of liability and property losses can be quite high. Even with a property manager in place to carefully screen prospective renters, the risks may outweigh the end reward. Careful planning and coordination of all rental agreements and management contracts with your legal advisor and insurance professional, is a critical step in protecting your assets and the anticipated revenue generated from renting.

Liability exposure

When a residence is rented on a short-term basis, an insurer may consider this to be a ‘business activity’ which may no longer qualify the home for typical liability coverage. Airbnb does offer liability insurance under their Host Protection Program; however, coverage is capped at $1,000,000. A good insurance advisor will have access to specialty markets, to provide you with the coverage you need.

Please keep these considerations in mind as you evaluate the return on your investment, when renting your home to generate income.

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Learn more about our Personal Risk Practice, or contact Katie Burger or Sarah Limeer direct.

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information.