If you’re renting out someone else’s home to host a Short-Term Rental, insurance providers view this is as a business activity, which will not be covered under a traditional renter’s policy. As a result, you’ll have to look into dedicated coverage for Rental Arbitrage. If you’re planning to start your Rental Arbitrage venture, you’ve come to the right place. Keep reading to find the answers to your questions about Rental Arbitrage insurance.
What kind of insurance does my landlord need? In a Rental Arbitrage situation, your landlord should continue to have a Landlord (Dwelling Fire) policy in effect for the life of your lease agreement. The landlord will want to make to make sure they notify their insurance carrier that the property is being used as a Short Term Rental and have the necessary coverage in place. With the property coverage, their landlord policy will provide coverage for the dwelling, any of their personal belongings within the premises, and liability.
What kind of insurance do I need for Rental Arbitrage? In addition to your Landlord’s policy, you will want to obtain a separate policy specifically made for Rental Arbitrage. At the time of writing this article, this type of policy costs about $1,200-$1,500/year. Anderson Ins Group offers a policy specifically for this type of occupancy. You will want this policy to offer liability coverage, loss of rents coverage, and coverage for your contents i.e. furniture, appliances, bedding, etc.
How is the monthly value of the loss of rents determined? The loss of rents is a coverage that applies in the event of damage to the property. You would be compensated for loss of rents while the property is being repaired/restored. This coverage amount is customizable and there is no monthly limitation. The policy would pay until the policy limitis exhausted. You will want to check with your agent on your current policy—every policy is written differently. Or you can also call Anderson Insurance Group for a review of your current coverage.
Is there Bed Bug coverage? Depends on the company. Some carriers offer it and others don’t. We add this onto every STR/Rental Arbitrage policy we issue. This coverage covers the cost of remediation subject to the deductible. More importantly, it would also cover the loss of rents. Sometimes the loss of income exceeds the actual physical damage. For example, let’s say you have guests on Thanksgiving and they track Bed Bugs into the property. The coverage would pay for remediation and coverage would apply for the loss of income for all your December bookings and beyond (until the damage is remediated).
Before you host guests, you’ll want to make sure you have the proper coverage in effect. Anderson Ins Group offers affordable and comprehensive coverage Rental Arbitrage Insurance. Reach out to our office and ask for a quote: 801-262-1551