Vacation Rental by Owner, or VRBO, is currently the fastest growing rental segment in the U.S. Short Term Rentals came about primarily because of the high cost of owning a second home. Many second homesare only used 2 – 3 months of the year. VRBO allows the owner to rent out their property on a short term basis, much like you’d rent a hotel room. There are websites that help facilitate the transaction between the owner and the renter. vrbo.com is one website that owners and renters can go to to lease out or rent a home. We are happy to assist you with your VRBO insurance needs in Colorado!
Insured as Owner – Occupied
A major concern with renting out your property on a short term lease is, ‘how do I insure my home?’. Typically the owners of these types of properties are insuring them incorrectly. I’ve come across VRBOs insured as secondary residences, vacation homes and long-term landlord policies.
The problem with insuring your property as a secondary residence or vacation home is that these policies are written with the assumption that you are the person staying in the home and you aren’t using your property to generate income. These policies also don’t have the appropriate type of liability and don’t cover ‘loss of rental income’. In a worse case scenario, a claim may be denied all together because of a ‘material misrepresentation’ by the insured. Insureds have a duty to disclose the use of the property to the insurance company and a duty to read your policies on new business and renewals.
Insured as Long-Term Rental
You may be asking, “can’t I insure this as a landord policy? This
type of policy includes loss of rent and the expectation that the property generates income”. You would be correct in that statement, however, a typical landlord policy will have a clause that only long term lessees are allowed, at a minimum, a month to month renter. Many people are concerned that the cost of insuring a home with short-term rental exposure will be much higher than insuring a home as a long-term rental. I’ve found the difference in cost to generally by less than 20%.
It’s extremely important that you get a vacation rental policy for your VRBO property. My office offers these policies at a low cost and a great value. It’s important that you speak to a professional, who understands VRBO Insurance. Please fill out the form below, call or email today for a quote.