If you have a property in Puerto Rico that generates income from short term rental, then you are operating a commercial venture, and as a result need to get the corresponding commercial insurance to adequately protect yourself. Short term rental is a special kind of risk that insurance companies evaluate separately from long term rental, and several insurance companies in Puerto Rico now offer policies specifically designed for this risk.
What insurance do I need if I rent out my property through AirBnB or another short term rental property?
Since operating a short term rental is considered a commercial venture, you need to ensure that you have commercial liability coverage. If you currently have a personal package or a homeowner’s insurance policy, then it will exclude any liability arising from a short term rental.
What happens if I don’t have insurance on my property?
If you don’t have any commercial liability insurance for your operation, then you are liable to be sued for damages for any number of things that can occur during the stays of your tenants. An example can be that a tenant trips over something that was loose in the apartment, and sues you for damages due to negligence.
In addition to this, it is possible that if you are using a platform to rent your property out, then the platform may have specific requirements with regards to what insurance coverage you need to hold to list on the platform. Failure to comply with these requirements may lead you to be unable to list on the platform.
What about the Host Liability Insurance that AirBnb offers?
If you are renting out through the AirBnb platform, then you should be aware that AirBnb offers a $1 million liability policy automatically for rentals that are made through the platform. If you only have one property that you are renting out and you are renting out exclusively through AirBnb, then this coverage is likely sufficient for your needs.
If you rent out multiple properties, or are using multiple platforms, or this is your main business, then you should at least consult with an insurance broker to ensure you are adequately covered.
What about the master policy I pay as part of my condo insurance?
As a condo owner, you are likely paying a portion of the building’s master policy, which covers the building structure. The key here is that this policy covers the building, not any liability arising from the commercial operation of short term rental. In the case of a bare wall condo policy, then the policy covers only the structure of the building, and original buildings, it does not cover any improvements made by the unit owners over the years. A full value-policy, in contrast, insures the entirety of the building including improvements that tenants have made to their units. It’s basically the same as the hazard insurance you pay as part of the mortgage on a house.
What is covered by short term rental insurance?
A short term rental insurance policy covers your liability as the property owner that may arise from your rental activities. There can be a whole host of things which may cause the property owner to be sued, and generally the short term rental insurance policy will cover these. For example, if a tenant falls and suffers an injury within the property, they may sue the property owner, in which case the short term rental insurance policy will cover the associated legal expenses. Similarly, if some of the tenants behave in a rowdy manner and cause damage to a neighbor’s property or an issue arises with the HOA, the insurance policy will protect you in the event of liability.
What is not covered by short term rental insurance?
Short term rental insurance is a liability only policy, which means it will not cover damage to the structure or the contents inside of the property.
What factors influence the premium of my policy?
The factors that influence the risk, and by consequence the insurance premium or price, will be the same as with a property policy. That is, if a property does not have a solid structure, or is in a high risk location, such as an oceanfront property, then those factors can influence the premium. In this type of policy; however, many companies have set rates, and as long as the unit qualifies for some coverage, then you will get the standard rate based on how many rooms the unit has. There is also a premium to be paid if the unit has a private pool.
How can I obtain a short term rental insurance policy for my property?
As a full service insurance broker, we manage various situations where owners have acquired short term rental insurance policies to suit their needs. You can contact us for a free consultation, and we would be happy to guide you and give you an honest assessment of your options, even if that means that the best option for you is to obtain no supplemental insurance.