One of the reasons that short term rentals have gained in popularity over the years is that they offer guests the freedom to choose their period of stay, which could be anywhere from a day, a week, or a month, without the hassle of long-term contractual commitments.

For owners, short term rental could mean higher potential income. Daily prices can be adjusted depending on market rates, and owners have the flexibility to block out dates when they do not want to accept reservations. This model can benefit property owners, vacation rental operators, and real estate investors looking to maximize usage of their assets during peak demand periods.

However, since renting out a home for short-term purposes is considered a business venture by most local governments—and definitely by many insurance companies—protection under a standard homeowners insurance policy may not be possible. This creates liability exposures and property damage risks that require specialized coverage.

Renting out a part of your home or the entire property to short-term guests may require you to consider one of two insurance options:

Updating/Adding to your Homeowners Policy

With the help of an insurance endorsement, your existing policy can be modified to provide the coverage you need. This option is best suited for landlords who rent occasionally and are not operating short-term rentals as a full-time business. It may include limited liability protection and personal property coverage during guest stays.

Business Insurance Policy / Bed & Breakfast Policy

When endorsements or riders are not available, residential property owners will need a standalone policy designed for commercial use. These policies typically combine property coverage and commercial liability, offering broader protection for hosting guests. This is especially important if you provide amenities like pools, bicycles, or outdoor equipment, which can increase injury risk exposures.

Short Term Rental Insurance, also known as STR Insurance or Home-Sharing Insurance, is a commercial package policy that expands coverage beyond a typical homeowners policy. It helps fill gaps in protection when on-site incidents occur during a short-term rental period.

A typical policy should offer protection for:

• Structural damage to your home and other buildings from natural disasters
• Your property from guest-caused damage
• Equipment, amenities, and accessories provided to guests
• Damage or loss to personal belongings kept on the premises
• Injury or property damage caused by or sustained by guests
• Loss of business income from covered causes

For example, if a guest accidentally starts a fire while cooking, a standard homeowners policy may not cover the resulting damage, but a short term rental policy typically would. This type of insurance is especially relevant for operators listing on platforms like Airbnb or Vrbo, where guest turnover is frequent and liability risks are elevated.

To explore coverage options for short-term rentals, visit our Short Term Rental Insurance Overview or learn more about Short-Term Vacation Rental Insurance.