What You Need to Know About Short-Term Rental Insurance Costs

Laura Olson
Dec 27, 2022

The short-term rental market is poised for further growth nationwide, according to a recent article on Hospitality Net, listings, guest demands, and revenues are all on the rise and predicted to increase in 2023.

If you're reading this, you already know that most short-term rental marketplaces offer insurance while you have guests. But did you know these same platforms do not insure your property while it's vacant between guests?

That is why a short-term rental insurance policy is helpful—you're essentially only insuring your property when it's unoccupied. Keep reading to learn more about the cost of short-term rental insurance so you can make the best decision for your rental property.

What Does Short-Term Rental Insurance Cover?

A short-term rental insurance policy covers a rental property leased out for short periods, usually 30 days or less. This policy typically provides coverage for the dwelling, other structures on the property, personal belongings, and liability. Some policies will also cover loss of income if your rental property becomes uninhabitable due to a covered peril.

Short-term rental insurance policies protect property owners against several events, just like standard homeowners insurance policies or landlord policies. These include theft, vandalism, fire, smoke, vehicles, and explosions, just to name a few. 

Although exclusions vary between providers, most short-term rental policies will not cover damages from natural disasters like floods and earthquakes. 

Short-term rental insurance policies will primarily provide coverage for basic hazards:

  • Dwelling protection covers the physical structure of your property, such as the roof, walls, windows, and any detached structures like fences or garages. 
  • Personal property protection covers your household belongings used to service a short-term rental property, including appliances and electronics, furniture, carpet, and other personal items inside the house.
  • Loss of use applies when your rental property gets damaged to the point you cannot host any guests. That translates to lost rental income while your property is under repair. 

Loss of use reimburses you for the rental income you’d otherwise enjoy during this period. However, it only applies when the property suffers damage from a covered peril, not a lack of guests. 

  • Liability coverage protects you from claims or lawsuits filed by guests and other third-party individuals who get injured or incur a loss on your property. This coverage is intended to cover legal costs, medical costs for the injured party, and other damages from the lawsuit.

Besides the basics, some short-term rental policies will also cover you against the excess use of utilities such as water and power. For instance, a guest might forget to switch off the lights or leave a tap running, inflating your utility bill for that period. Your short-term rental insurance steps in, covering the extra cost.

How Much Does Short-Term Rental Insurance Cost?

The cost of short-term rental insurance varies. It depends on several factors, including the location of the property, the value of the property, the type of coverage you need, and more.


A property in an area with a higher crime rate or risk of natural disasters or one that is close to popular tourist attractions is more likely to experience common occurrences that could lead to filing an insurance claim. As a result, the insurance price may be higher than if the property was outside these areas.

Note: If you’re analyzing a property and want to see if it’s in a natural hazard risk area, use Obie’s free Risk Map here.

Condition of the Property

The property age and how often it is maintained, indoors and outdoors, play a role in how much insurance will cost. For example, if the plumbing and wiring are old, that poses a greater risk of fire or flooding to the insurer, which results in higher costs.


Apart from your property’s condition, your insurance carrier will also consider its square footage. Larger properties require more construction materials, labor, and time to rebuild or repair, hence the higher cost of insuring them.

Construction Materials

Were the construction materials used to build your property standard and common? Unique and costly materials usually also mean pricier insurance for the property.

Personal Items

Your insurance company will not only consider the construction materials of your property when determining rates, but they will also consider the quality of your household contents. The replacement cost of higher-end items is more expensive, and your insurance rates will reflect that.

Available Amenities

Having riskier amenities on your property, such as swimming pools, hot tubs, and fireplaces, will result in you having to pay more for insurance. If you decide to install any of these amenities, be sure they are up-to-code and properly maintained. Furthermore, consider investing in additional safety measures such as a pool fence or childproofing a fireplace.

Rental Frequency

As short-term rental insurance only covers the time your property is unoccupied, carriers will assess how often the property has guests. The more frequently you have guests and higher occupancy in your rental, the lower your insurance costs.


The higher your deductible is, the less your insurance costs. However, remember a high deductible means paying more out of pocket for repairs if you have to file a claim. A good rule of thumb is to select the higher deductible option only if you're comfortable with being financially responsible for any claims up to that amount.

Is Short-Term Rental Insurance Worth It?

Short-term rental properties present more risk for landlords and property owners than long-term rentals.

The likelihood of theft and vandalism is higher when a short-term property is vacant between guests than when you have long-term tenants. Fixtures that need repair might also go unnoticed if your property has no guests for an extended period. 

Additionally, high guest turnover increases the probability of malicious damage to the property compared to dealing with known long-term tenants.

Short-term rental coverage provides landlords and property managers with essential protection in addition to a landlord insurance policy. To ensure you are getting the coverage you need from your short-term rental insurance policy, here’s what to keep in mind:

  • Premiums: The level of your insurance coverage is based on how much you're willing to pay in premiums. Although it's common for businesses to try and save money or look for discounts, cutting back on insurance coverage could cost you more in the long run.
  • Level of coverage: It is crucial to understand that though short-term rental policies offer coverage for the basics, there are always limits and exclusions to each insurance plan. You should be fully aware of what your insurance carrier covers and doesn't cover. 

For example, how much will they pay for property damage, and how long will they cover you in case of loss of use? Your provider should understand your needs so they can give you the maximum coverage.  

  • Insurer’s history: With the rise in popularity of short-term rentals, not every insurance company has specialized policies to meet those needs. If you are looking for a short-term rental insurance provider, research the carrier’s history to see if they have experience in this niche. 

The risks are higher with short-term rentals, so you need a provider with fair coverage and policy limits who can process claims quickly. Also, consider the company’s financial stability and reputation to ensure it will be around for a while.

The bottom line is that short-term rental insurance is worth it if you want peace of mind knowing your property is covered if something happens when it's rented and when it isn’t. 

Next Steps: Get an Instant Quote Online with Obie

Short-term rental insurance is a necessity when renting out your home or property, either partially or in its entirety, to short-term guests. Given the heavy traffic of guests on your property, the risk of damage and accidents is higher.

Purchasing the right short-term rental insurance will cushion you against financial loss from several perils, including structural property damage, loss of use, and liability. When choosing the right provider, consider the cost of your premiums and the type and level of coverage offered.

You want to be sure you are getting industry-best rates and coverage tailored to your needs when looking for the right short-term rental insurance provider. With a tech-enabled online insurance broker like Obie, you can shop around without ever having to leave your home.

Obie offers competitive rates on policies specifically designed for short-term rentals with additional coverage options such as loss of use and liability. Get the insurance you want without all the headaches of traditional paper applications and processes.

If you need quality short-term rental insurance, consider turning to Obie—the hassle-free way to get the best industry coverage in one place. To get started, simply visit the Obie website and enter the address of your short-term rental property.

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