What Is Short-Term Rental Insurance?

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It’s critical for property owners to understand that homeowner insurance typically does not cover commercial activities or short-term property rentals. To adequately protect their properties and finances, hosts need a short-term property rental insurance policy, also known as Airbnb insurance or VRBO insurance.

Short-term property rental insurance protects property owners and their finances when they rent out their homes or residential spaces. This coverage is for brief stays, usually on a daily or weekly basis.

What Does Short-Term Property Rental Insurance Cover?

A typical short-term property rental insurance policy from Zensurance usually includes the following coverage:

• General Liability Insurance: Also known as ‘slip-and-fall’ insurance, general liability insurance covers claims alleging third-party property damage or bodily injuries if, for instance, a guest visiting your property falls and is injured. General liability insurance may pay for the third-party medical expenses and your legal fees if the guest decides to sue you.

• Commercial Property Insurance: Commercial property insurance protects against physical damage or loss to your property and its contents. This coverage is typically for external disasters, including fire, theft, or vandalism. It typically covers physical assets, such as furniture, personal belongings, and electronics, that are either stolen or damaged.

• Rental Income Insurance: Rental income insurance, or business income coverage, is a type of business interruption insurance. It reimburses property owners for lost short-term rental income resulting from an insurable loss, such as a fire that damages the home or unit. 

• Cyber Liability Insurance: Cyber liability insurance helps cover expenses resulting from cybercrime that affects your technology systems and compromises your customers’ data. For example, if a phishing attack compromises your data, this coverage addresses costs such as software restoration, legal fees, credit monitoring, and risk management charges, as well as notification expenses.

For condominium owners, in addition to the above, their policies may also include:

• Loss Assessment Coverage: Condo owners share ownership and responsibilities with other individual unit owners for the condo building’s common areas, such as a swimming pool or fitness centre. If a damage claim is made against the condominium corporation and that claim exceeds its master insurance policy limit, this coverage may pay for your portion of that damage or loss.
• Contingent Unit Coverage: Contingent unit coverage can safeguard your condo unit when your condominium corporation’s insurance is inadequate, non-existent, or doesn’t cover the specific damage. Adding this to your policy helps protect you from damages in those circumstances.

Frequently Asked Questions (FAQs) About Short-Term Property Rentals in Canada

What’s the difference between landlord insurance and short-term property rental insurance?

A landlord insurance policy is designed to cover long-term residential rental properties where tenants may sign a one-year lease. 

A short-term property rental insurance policy covers short-term stays featuring many guests that last a few days or weeks. Short-term property rental insurance typically applies to owner-occupied residences (such as when a property owner rents out a room in their house) or entire properties for short-term durations.

What is the 80/20 rule for short-term property rental hosts?

The 80/20 ‘rule’ for short-term rentals is that 80% of bookings or revenue a host earns comes from about 20% of their property listings, be they on sites like Airbnb, VRBO, or others. Properties with positive reviews, excellent photos, and thoughtful descriptions usually attract the most attention from guests.

Why do short-term property rental hosts need commercial insurance?

A homeowner’s insurance policy does not typically cover damages or losses resulting from commercial activities, such as a host renting their residence to vacationers or guests. 

It’s recommended that homeowners consult with their home insurance provider to determine the coverage their existing policies offer for short-term rentals, or to find out if it’s not covered. If your home insurance provider does not provide sufficient coverage, it’s wise to obtain a customized short-term property rental insurance policy from Zensurance to fill those gaps. 

How to Get Low-Cost Short-Term Property Rental Insurance in Canada

Zensurance is Canada’s leading online small business insurance brokerage. We help hundreds of thousands of Canadian small business owners and independent professionals protect their finances and assets with comprehensive, low-cost coverage, including short-term property rental hosts.

Complete our online application now in less than five minutes for a free quote.

Let our team of friendly and knowledgeable insurance brokers shop our partner network of over 50 insurers to find the right policy to suit your short-term property rental business, customize it to suit your needs and budget, and issue your policy documents and a certificate of insurance in 48 hours or less.