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Vacation Rental Insurance for Condo Owners

By April Klazema
Published: 10/12/15 Topics: Insurance, Lodging Management, Vacation Rentals Comments: 0

Vacation Rental Insurance for Condo Owners

Say you own a condo in Florida that you have been visiting every spring break for ten years now. Next spring, you have a different trip planned and won't be able to make it down to the condo at all. However, the condo is in an area that is a hot tourist destination during the winter and spring months. If you aren't going to be using it, you figure someone else would pay good money to rent it out for a few weeks. Who knows? You might even be able to finance most of your other trip just by renting out your condo to other Florida tourists!

Remember Vacation Rental Insurance!

Before you start setting up an Airbnb account or uploading pictures of your condo to VRBO.com, you need to take a moment to look into getting vacation rental insurance for your condo. While your condo is probably currently insured as a second home on your homeowner's insurance policy, you need a different type of coverage if you are planning on renting out the property to anyone else.

Let us explain. When you are utilizing a vacation property for personal use—be it a condo, a cottage, or an actual second home—it can be considered a personal residence for insurance purposes. That's because what you are using the property for—more or less, as a place of lodging for you and your family—is not really different from what you use your primary home for.

The moment you rent out your condo, the primary use of the property switches from residential to commercial. If you are letting someone stay at your condo in exchange for money, then you are, by definition, using the property for the purpose of business. This type of commercial use of your property is not covered under traditional homeowner's insurance policies.

What You Get with Vacation Rental Insurance

As with any other type of insurance, your vacation rental policy will vary depending on the value of your condo and the value of its contents (furniture, appliances, etc.). However, most vacation rental insurance policies will likely come with the following types of coverage:

Commercial liability coverage: Keeps you from being held liable if a guest is injured or killed while using your property.

Replacement cost coverage: Reimburses you for the cost of your condo or your belongings in the case of catastrophic damage or theft.

Coverage for damage: Helps you pay for damage caused to your condo or building by a guest.

Loss of income coverage: If a guest damages your condo to a point where you have to cancel other reservations or take it off the rental market for an extended period, this type of coverage will reimburse you for lost rental income.

You will want to speak with your insurance agent to see if you can add a vacation rental insurance policy to your condo, and to learn about the types of coverage that are available in their vacation rental policies.

Author: April Klazema – Reporter, Vacation Rental Association
Blog #: 0417 – 10/12/15

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