Renting Your Home on Airbnb or VRBO? Your Landlord Policy is Now Worthless.
I Thought I Was a Landlord. My Insurer Said I Was a Hotelier.
I was renting out my second home on VRBO and thought my standard landlord (DP-3) policy had me covered. Then, a guest had a wild party and caused thousands of dollars in damage. My insurance company denied the claim completely. They explained that a landlord policy is for a long-term, residential tenant. By renting my home out to short-term, transient guests, I was operating a business—a hotel. This “business activity” was explicitly excluded from my policy, leaving me completely on the hook for the damages.
The “Business Activity” Exclusion That Voids Your Coverage with Short-Term Rentals.
The Most Powerful Clause in Your Personal Insurance.
Every personal homeowners and landlord policy contains a “business activity” or “business pursuits” exclusion. This is a powerful, brick-wall clause. It states that the policy will not cover any property damage or liability that arises from a business being conducted on the property. The moment you start listing your property on a platform like Airbnb or VRBO, you have begun a commercial, hospitality business. At that moment, your personal insurance policy is effectively void for any rental-related claim.
How a Commercial “Vacation Rental” Policy Protects You From Rowdy Guests and Liability.
The Right Insurance for a High-Risk Business.
A specialized vacation rental insurance policy is a commercial policy designed for the unique risks of the short-term rental business. It not only covers damage to your property caused by a guest, but it also provides robust commercial liability protection. If a guest trips on your steps and sues you, this is the policy that will defend you. It can also cover lost rental income if the property is unrentable after a claim. It is a true business insurance policy for your hospitality business.
Landlord Policy is for Long-Term Tenants. Vacation Rental Policy is for Short-Term Guests.
The “Resident vs. Guest” Distinction is Everything.
This is the simple, core distinction. A Landlord Policy is designed for the risks of a resident. You have a long-term lease with a tenant who lives in the property. The risk is relatively low and stable. A Vacation Rental Policy is designed for the risks of a guest. You have a high turnover of short-term, transient guests who are in “vacation mode.” The risk of parties, damage, and liability is exponentially higher, and the policy is priced and designed for that higher risk.
“My Airbnb Guest Threw a Party and Destroyed My House.” Who Pays?
A Real-World Nightmare That Demands a Real Insurance Solution.
This is the nightmare scenario for every Airbnb host. A weekend guest turns your beautiful home into a party house, causing tens of thousands of dollars in malicious damage. Your landlord policy will not pay. Airbnb’s “Host Guarantee” is not real insurance and is notoriously difficult to collect from. The only reliable, contractual promise of protection in this scenario is a proper, commercial vacation rental insurance policy that is specifically designed to cover damage caused by your guests.
The High Turnover and “Hotel-Like” Nature of a Vacation Rental Requires a Special Policy.
You Are Operating a Business, Not Renting a Home.
Think about the nature of your operation. Are you providing a long-term residence for a tenant? Or are you providing short-term, furnished lodging to a rotating cast of guests, complete with amenities and cleaning services? The second scenario is a hospitality business. You are operating a small, unlicensed hotel. A business of this nature, with its constant turnover and public exposure, requires a real commercial insurance policy, not a personal landlord policy.
Don’t Rely on Airbnb’s “Host Guarantee.” You Need Your Own Real Insurance.
A Marketing Promise is Not a Legal Contract.
Airbnb offers an “AirCover for Hosts” program, which includes a “Host Guarantee.” It is very important to understand that this is NOT an insurance policy. It is a marketing promise, and Airbnb has the final say on whether or not they will pay. There are many horror stories of hosts having their claims denied for arbitrary reasons. It is not a substitute for having your own, separate, robust vacation rental insurance policy, which is a legally binding contract that you can rely on.
A Side-by-Side Comparison of a DP-3 vs. a Proper Short-Term Rental Policy.
The Gaps in the Landlord Policy are Terrifying.
| Feature | DP-3 Landlord Policy | Vacation Rental Policy |
| Damage by Tenant | Covered | N/A |
| Damage by Guest | EXCLUDED | Covered |
| Liability for Guest Injury | EXCLUDED | Covered |
| Lost Rental Income | Covered (long-term) | Covered (short-term) |
| Theft by Guest | EXCLUDED | Covered |
The comparison makes it clear that a landlord policy leaves you completely naked for the most common risks of a short-term rental business.
From Lost Rental Income to Guest Lawsuits, The Risks a Real Policy Covers.
Comprehensive Protection for Your Hospitality Business.
A good vacation rental policy is a comprehensive shield. It protects your building and its contents from guest-related damage. It protects you from liability lawsuits if a guest is injured. It protects you from the loss of your business income if the property is unrentable after a claim. And it can even provide coverage for theft of your property by a guest. It is a policy that is custom-built to address the full spectrum of risks that come with the vacation rental business.
If You’re Running a Vacation Rental, You’re Running a Hospitality Business. Insure it Like One.
Professionalism Demands Professional Protection.
The moment you list your property on a short-term rental site, you cease to be just a homeowner or a landlord. You become a small business owner in the hospitality industry. A professional business owner does not gamble with their assets. They protect their enterprise with proper, commercial-grade insurance. A vacation rental insurance policy is the specific, professional tool designed for this exciting and high-risk business. Don’t be an amateur; insure your business like a pro.