If you rent out a home or apartment—whether occasionally on Airbnb/VRBO or to a long-term tenant—you face risks a standard homeowners policy isn’t designed to cover. The key to getting claims paid is aligning your coverage with how the property is actually used and documenting that use clearly.
What’s the Difference Between Homeowners and Rental (Landlord) Insurance?
Homeowners (HO-3/HO-5) is for owner-occupied homes. It usually includes dwelling coverage, personal property, personal liability, and loss of use when you can’t live in the home after a covered loss. Some insurers offer limited home-sharing endorsements for occasional short-term hosting—but only when the eligibility rules are met.
Rental/Landlord (Dwelling/DP-3) is for tenant-occupied property (non–owner-occupied). It typically covers the structure, your landlord-owned contents (like appliances), landlord liability, and loss of fair rental value (loss of rents) when a covered loss makes the unit uninhabitable.
Tip: DP-3 commonly uses open-perils coverage on the structure and named perils for landlord contents. Add endorsements for water backup, theft/vandalism (if excluded), ordinance or law, and equipment breakdown where available.
Why Does Rental Duration and Frequency Matter?
Insurers draw a line between short-term hosting (many stays of under ~30 days) and long-term tenancy (months or years). Frequent short-term rentals are often treated as a business activity, which standard homeowners policies usually exclude unless you add specific endorsements or buy a specialty short-term rental policy. Some states and cities also impose their own rules (e.g., licensing, minimum liability limits, and notice to your insurer).
How Do Airbnb/VRBO Protections Fit In?
- Airbnb AirCover for Hosts bundles a Host Damage Protection program (contractual, not a homeowners/landlord policy) and $1M Host Liability Insurance. You must initiate claims promptly, with strict timelines and documentation requirements.
- VRBO provides a $1M liability program for eligible bookings; damage protection is separate. These benefits are helpful backstops—not replacements for a policy that insures the building and aligns with actual use.
Which Policy Do You Need?
1) Long-Term Lease to a Tenant (months/years)
- Primary policy: DP-3 landlord policy.
- Key coverages: Dwelling (ideally at replacement cost), Other Structures, Landlord Personal Property (if you furnish appliances), Landlord Liability ($300k–$1M+), and Loss of Fair Rental Value (loss of rents).
- Add-ons: Water backup, Ordinance or Law (code upgrades), Theft/Vandalism (if excluded), Equipment Breakdown.
- Best practice: Require tenants to carry renters insurance (HO-4) and name you/your PM as “additional interest” for notice.
2) Frequent Short-Term Hosting (Airbnb/VRBO)
- Primary policy: Specialty short-term rental policy or commercial homeowners form that treats the activity as a business.
- If owner-occupied part of the year: An eligible home-sharing endorsement may cover some hosting activity; confirm limits and exclusions.
- Platform programs: Treat AirCover/VRBO liability as supplemental. You still need property (dwelling) insurance that matches your use.
3) Mixed Use (you live there part-time, rent part-time)
Tell your agent exactly how many days you host vs. occupy. You may need a blended setup (homeowners + home-sharing endorsement) and landlord/STR coverage for hosted periods.
4) Don’t Forget Catastrophe Gaps
- Flood and earthquake are excluded on standard homeowners/DP-3 policies. Consider NFIP or private flood; in California, check CEA earthquake options (including loss-of-use benefits).
Exactly How to Set Up Your Policy So Claims Get Paid
- Match the insured to the title holder. If the property is titled to an LLC or trust, insure it that way. Add the lender as mortgagee; list the property manager as additional insured/interest if required.
- Disclose occupancy/use changes immediately. Owner-occupied → tenant or short-term rental must be reported; non-disclosure can void coverage.
- Choose the right loss settlement. Ask for Replacement Cost (RCV) on the dwelling if available; understand how ACV vs. RCV affects payouts.
- Add Ordinance or Law coverage. Code upgrades after a loss can be expensive; higher limits are often worth it for older buildings.
- Document everything. Before each tenancy/guest: time-stamped photos/video, inventory of landlord-owned items, appliance serials, and a move-in checklist signed by the tenant.
- Require renters insurance. Keep certificates on file; set minimum liability (e.g., $100k–$300k) in the lease.
- Mind vacancy clauses. Some coverages restrict losses after extended vacancy (60+ days). Ask how vandalism, glass breakage, and water damage are treated during vacancy.
- Know platform deadlines. For Airbnb damage, open the request in the Resolution Center quickly (e.g., within 14 days of checkout) and gather photos, receipts, and messages.
What Does “Loss of Rents” Actually Pay?
Under DP-3 Coverage D (Fair Rental Value), if a covered peril (like a fire) makes the unit unfit to live in, the insurer reimburses the fair rental value for the shortest time reasonably required to repair or replace the damage. It does not cover tenant non-payment, market downturns, or vacancies unrelated to a covered loss.
Premium Realities in 2025
Home and landlord premiums have faced upward pressure due to higher rebuilding costs, catastrophe losses, and liability trends. Landlord/DP-3 usually costs more than a comparable homeowners policy because tenant exposure and loss-of-rent features increase risk. Exact pricing varies by state, construction, protection class, and claims history.
Common Scenarios (and the Right Coverage)
- Occasional one-week holiday rental: Ask about a home-sharing endorsement to your homeowners policy. Confirm what’s covered and what’s excluded.
- Condo held as a full-time rental: Get a landlord/lessor policy tailored for condos plus liability and loss of rents; require tenant HO-4.
- Three STR properties on Airbnb/VRBO: Use a specialty STR or commercial form; treat platform protections as secondary.
- High-risk location (flood/quake/wildfire): Add appropriate catastrophe coverage (NFIP/private flood; CEA quake in CA) and discuss wildfire mitigation credits where available.
FAQs
Does a homeowners policy ever cover rentals? Sometimes—for occasional hosting if you add the right endorsement and meet the insurer’s rules. Otherwise, rental/business exclusions often apply.
Is Airbnb AirCover “insurance”? AirCover includes a contractual damage program and separate host liability insurance up to stated limits. It’s not a substitute for a landlord/STR policy that insures the dwelling and fits your usage.
Will my policy pay if the tenant stops paying rent? No. Loss of rents pays when a covered loss makes the unit uninhabitable; it does not insure against tenant default.
Do I need umbrella liability? Consider it—especially if you have meaningful assets or multiple rentals. Umbrella raises liability limits above underlying policies (commonly by $1–$5 million or more).
My city requires special STR insurance. How do I comply? Check state/local law and platform requirements, carry the mandated limits (often $1M), and notify your insurer you’re operating an STR.
Why This Matters to the Insurance Industry
Home-sharing blurred personal and commercial risk, pushing carriers to create home-sharing endorsements and specialty short-term rental products. Regulators in several states now require disclosures and minimum liability for STRs, while platform programs add complexity but cannot replace primary coverage. For agencies and carriers, accurate occupancy classification, clear disclosures, and documentation are now central to underwriting and claim outcomes.
Sources and Further Reading
- NAIC – Renting Out Your Home: Insurance Coverage for Home-Sharing Rentals
- Airbnb – AirCover for Hosts
- Airbnb Help – AirCover for Hosts FAQ
- VRBO – Damage Protection
- Massachusetts Short-Term Rental Insurance Law
- NFIP / FloodSmart – Flood Insurance Basics
- California Earthquake Authority – Coverage Options
- Insurance Information Institute – Statistics on Homeowners and Renters Insurance
- III – Facts and Statistics on Renters Insurance
Corey Elsasser
