Is your Short-Term Vacation Rental considered a Business?
YES, Absoutly! It's basically considered in the same arena as owning a very small hotel or motel. This is why the IRS has been updating the tax codes for vacation property owners who are now required to file a Schedule C on their income tax returns. The IRS does not require this for owners with long-term leased properties. Due to the recent popularity of owners making the decision to make their homes short-term vacation rentals many major cities like Chicago, Austin and Santa Barbara now require these owners to carry a business licence. In fact, in Febuary 2015 San Francisco passed a law for anyone with a short-term rental (less than 30 days) will be required by law to pay 14% hotel tax and at least $500,000 in liability insurance registered with the city.
What length of rental time that is considered a "short-term" vacation rental?
Generally speaking, in world of insurance, less then 6 months is typically considered a short-term rental. Another way to look at it, is if a renter doesn't consider your property their primary home, it's usually because they are on vacation! A dead give away is when you can find the property is listed for rent on a website like VROB, HomeAway, Airbub, BookByOwner, RentByOwner and several other websites online. Also, there are many local property management companies that specialize in renting, cleaning and caring for vacation rentals for owners that don't want to deal with the business part of maintaining a vacation rental. If you find properties available for rent by one of these type offices, it is probably a good sign it's considered a short-term vacation rental.
Does my regular homeowners policy cover my short-term vacation rental?
NO. All homeowners policies carry a "business activity exclusion" in the actual policy contract. This exclusion applies to both the building property damage and liability coverage. In other words, any claim involving any "business activity" could rightfully be denied. Unless your main policy declarations page acknowledges it's insured as "Vacation Rental", never assume your covered in the event of a claim.
I currently have a "Landlord", tenant-occupied type of homeowners policy, I've been told this covers my short-term rental... Is this true?
We're not looking at your actual policy contract, however (usually) most all Landlord policies are designed specifically for long-term leases and do carry a "business activity exclusion". Landlord policies are written to protect landlords, not business owners. Long-term leases are not considered a business by insurance companies. Let's use a liability example: A renter leased your home for 1 year. During the winter months, it rains, snows and the temperature drops below freezing. While the renter is leaving for work they slip and fall on a step covered in ice where they left some summer time planting debris which caused water to build up and turn into ice. Does this liability fall on the landlord? No, of course not. It's the tenant's responsibility to keep the steps and walkways clean and clear of debris. In contrast, when any short-term renter occupies this property they assumed they were renting a clean and safe place. This is no different then a hotel. The liability falls on the property/business owner.
How can I get covered for business activites to start renting my short-term vacation rental?
You need to purchase a policy designed specifically for this type of exposure. This way there are no suprises of the occupancy or usage to a claims adjuster when a claim arrises, in addition your not sweating the fact the claim may be denied. There is no reason not sleep at night when you know you can purchase the right coverage for your home, separate structures, personal property, liability, loss of rents and medical expenses through Heald Insurance. The programs we represent are indeed designed specifically for short-term property rentals so as a owners, you know you'll never be denied coverage for that reason.
If we buy a short-term vacation rental policy, will we also be able to use our home?
YES. Definately! Enjoy your place as if you were on your own vacation... why not? There are no owner-occupancy restrictions. However, if you never attempt (or intend) to rent out your property, then this type of policy is not for you. This program is only design for owners who actually are actively listing or advertising their property for rent as a short-term rental.
If I have a vacation rental policy, do I still need to keep my homeowners or landlord policy in force?
NO. Our coverage is designed to fully replace the current coverage you may have. This will be the only policy you'll need. You can cancel your current policy. The only exception is when it comes to Condos or Townhouses where an association exists and maintains a Master HOA commercial lines policy that insures all the main structures. You need to continue that coverage.