Short-Term Rental Insurance: How to Protect Your Airbnb or Vrbo

You spent a lot of time and money to make your home a beautiful sanctuary—it makes sense that you’d want it to generate some income. But there are a lot of risks involved. Do you need special insurance to make this work?

Let’s take a look at how to know if you need an STR policy, what it covers, how to make sure you and your property are protected, and what you risk by not getting this coverage.

Why Standard Homeowners Insurance May Not Cover Your Short-Term Rental

Most homeowners insurance policies exclude coverage when your home is used for business. If you rent your rad artist’s loft or seaside cottage to paying guests—even occasionally—claims for guest injuries or damage may be denied because hosting is considered a commercial activity. Homeowners insurance provides financial protection for owner-occupied private residences for problems like fire and wind damage. When renters enter the picture, the situation changes. This means you need to treat your rental like a business.

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Learn which insurance fits your life and what it protects.

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What about landlord insurance? Well, landlord policies are built for long-term leases, not frequent guest turnover. When you rent on a short-term basis with lots of people coming in and out of your house, you’re taking on more risk than if one or a few people lived there long term.  

What Are the Key Risks of Hosting on Airbnb or Vrbo?

You take on a lot of risk when you invite paying strangers onto your property—like the risk that they could hurt themselves or steal from you. STR insurance covers those risks, plus a few more:

• Liability: A guest slips in your shower and is injured.
• Guest-caused property damage: A careless guest leaves the shower door open while they perform their 17 shower rituals and ruins the wood floor in your bathroom.
• Theft: A guest takes a fancy to your Martin guitar and packs it up in their van along with their suitcase.
• Lost income (from cancellations or damage-related downtime): You were counting on June’s high-season bookings to bring in extra cash, but a hurricane and a downed tree mean you can’t host for a month.
• Local compliance: If you don’t make sure your STR is simpatico with local ordinances, you could face heavy fines or legal action.

What Does Short-Term Rental Insurance Cover?

Short-term rental insurance covers your building and contents for damage caused by guests, business liability, loss of rental income, and additional protections like identity theft—risks standard homeowners policies typically don’t cover.

STR insurance is a type of property insurance that covers properties rented to guests for short stays. You can get a full STR policy that either replaces your homeowners insurance or works alongside it, or you can get an endorsement added to your existing homeowners insurance. Endorsements offer less coverage and are meant for property owners who host infrequently and only rent out a room (so they still live at the property full time).

For insurers, STR coverage doesn’t have middle ground. Even if you only rent one room out a few times a year, any claims related to hosting you file won’t be covered under your basic home insurance policy. And if you do have an STR policy, some policies only cover the contents of the room you’re renting out. Many don’t cover guests’ belongings if something happens to them.

How to Determine if You Need Special STR Insurance

These five questions will help you figure out whether you need an STR policy or another type of coverage:

1. Do you rent the whole property or just a room?Renting a single room while you still live there is often treated as lower-risk home sharing, so you may be able to add an endorsement to your existing policy rather than a whole new one. If you rent the entire property while you’re gone, your insurer will consider that commercial activity, and you’ll usually need a dedicated STR policy.

2. How often do you host?A weekend here and there is different from running your place like a full-time rental. The more nights you host, the more your homeowners insurer will see this as a business—and the less likely a home-sharing endorsement will cut it.

3. What does your current policy actually say?Don’t guess. Pull out your declarations page and look for the words business activity, short-term rental or home sharing. If your policy is silent on hosting, that’s not good news. If it’s not mentioned, that usually means it’s excluded, not covered.

4. What amenities do you offer?Pools, hot tubs, fire pits, trampolines, ATVs—anything that raises the odds of a guest getting hurt raises your liability risk. The more amenities, the more coverage you need.

5. What do local rules require?Some cities and states require proof of specific insurance before you can legally list your property. Check before you assume your current setup passes muster.

How Do You Protect Your Short-Term Rental Property?

Whether it’s a completely remodeled lighthouse with 2 million stairs or just a cozy bedroom in your home, here are the steps you should take to protect your STR property:

Audit your risk exposure and local requirements.

Look over everything your guests will have access to when they stay with you and note anything that could put you or them at risk. Trampolines, pools and tree forts are obvious ones, but don’t forget about animals or natural features like a lake or creek. Find out about local STR rules by checking out city and county websites, reviewing municipal zoning codes, and contacting local planning departments.

Review existing insurance and platform protections.

Read your homeowners policy and look for any mention of business or commercial use. Most policies will exclude it. Also check the protection provided by the platforms you rent through. Airbnb offers some coverage through AirCover, and Vrbo offers coverage as well. These usually don’t give enough coverage on their own, but it’s good to know what they provide.

Buy a dedicated STR policy or endorsement.

Whether you’re renting part time or all the time, you still need to get more protection than your homeowners policy and platform offer. Get either a home-share endorsement or STR policy based on your risk. An endorsement will be cheaper than a dedicated STR, but don’t skimp if you need the coverage! Having the right amount of protection is more important than price.

What affects the cost of short-term rental insurance:

• Location: Properties in areas with a high risk of natural disasters, high crime or expensive construction costs typically cost more to insure.
• Property value and size: If you’re renting out a castle, that’ll cost more to insure than a small condo.
• Hosting frequency: Renting nearly every weekend versus a handful of times a year changes how risky you are to insure—and that affects your costs.
• Whole-property versus single-room rentals: Renting the entire property while you’re away is usually priced differently from home-sharing a room while you still live there.
• Amenities offered: Pools, hot tubs, fire pits and other attractions (like an on-property jousting experience) that raise injury risk typically raise premiums.
• Liability limit: The higher your liability limit, the higher your premium will typically be.
• Claims history: Previous claims on the property or under your name can raise costs.
• Local regulations: Some cities require specific coverage minimums, which can affect your coverage options and how much it costs.
• Number of guests allowed: Higher maximum occupancy generally means more risk exposure.
• Deductible: A higher deductible typically lowers the premium, and vice versa.

To make sure you get the right coverage at the right price, go through an independent agent who can shop all the different insurers.

Reduce Your Risk as a Host.

When hosting, there are a few things you can do to lower your risk in the eyes of insurance companies:

• Screen guests using platform verification tools.
• Put house rules in writing (occupancy limits, no-party policy) and use a rental agreement for higher-value or longer stays.
• Confirm that any cleaners or other contractors carry their own liability insurance.
• Keep up with routine maintenance so small hazards don’t become guest injuries.

Document property condition and keep accurate records.

If you find any damage caused by guests, document it with photos and written descriptions—and report it to the insurance company immediately if you plan to file a claim. Make sure you keep accurate records of guest stays and any incidents that happen.

Reassess coverage annually and after changes.

Every year, look over your coverage and make sure it’s still what you need. If you’ve cut back on what you offer, you might be able to save some money by reducing your coverage. If you’ve expanded your rental, you might need more. But don't wait for your annual renewal. If you make significant changes to your rental, make sure your coverage keeps up.

Is Airbnb AirCover or Vrbo’s Protection Enough for Hosts?

While platforms like Airbnb and Vrbo offer some protection, always carry your own insurance and never rely on them exclusively. The coverage that platforms offer isn’t comprehensive—it has serious limitations, which is why you need your own coverage.

AirCover vs. Vrbo vs. Dedicated STR Policy

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Coverage through Airbnb or Vrbo only applies to bookings made through that platform’s checkout. If guests book directly with you or through another channel, there’s no coverage. Damage protection provided by Airbnb AirCover is a discretionary program, not an insurance policy—Airbnb decides whether and how much it will pay. And Vrbo’s liability program can carry a 25% deductible if the host’s own insurance doesn’t contribute. Both have important exclusions (normal wear and tear, acts of nature, damage to the host’s own property under Vrbo’s liability program, etc.).

If you’re running an STR, make sure you have the right coverage and aren’t blindly relying on whatever your platform provides.

How Much Liability Coverage Should Hosts Carry?

We recommend getting enough liability to cover your full net worth. Add up the value of all your properties and accounts (and anything else of value), and make sure your liability limits cover that amount. As a host, you’re exposing yourself to even more risk than the average homeowner. And an angry guest can come after everything—not just the worth of your rental business.

The typical STR policy liability limit is $1 million–2 million, but some policies go up to $3 million. If your net worth is higher than your STR limit, umbrella insurance can cover that gap. 

If you want help figuring out whether you need an umbrella policy or finding the right STR policy or home-share endorsement, a RamseyTrusted® insurance pro can help you. Don’t guess about your coverage. These pros are insurance experts and can review your situation, compare policies from multiple carriers, and make sure your short-term rental is properly protected—so you can focus on building wealth, not worrying about what-ifs.