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A short-term rental can be an easy way to rent your house and earn some money, but it does come with risks. Homeowners may face property damage issues following rentals or injuries on the property, which can even affect neighbors or disputes over noise, which may also lead to costly lawsuits, repairs or penalties.

Understanding insurance coverage

Standard US homeowners' insurance is designed for residential properties and doesn't cover commercial usage such as short-term rentals. So, if a guest gets injured during their stay at your property or if they damage it, your homeowner's policy may reject all claims. Some insurers may even cancel or refuse to renew your policy if you fail to disclose rental operations.

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If you are renting out your property, disclosing this information to your insurance company is really important. For short-term leases of less than six months, you can obtain coverage through an endorsement on your existing homeowners' policy. For long-term rentals of longer than six months, you will likely need to purchase a landlord insurance policy. However, it is best to consult with your insurance agent to determine the appropriate type of insurance for your specific situation.
Gosha Olszewski, director, Inside Sales — Personal Insurance

Comparing insurance options for a short-term rental

Type of plan Short-term rental coverage Long-term rental coverage Personal possessions protection for hosts Personal possessions protection for renters
Standard homeowners insurance Via endorsement No Yes No
Landlord insurance Generally not covered Yes Yes No
Renters personal article insurance Varies Generally covered No Yes

Homeowners can also purchase a Personal Liability Umbrella policy for extra liability coverage that includes defense costs, attorney fees and other charges associated with lawsuits.

Checklist for renting out a property or a room as a short-term rental

Understand local laws and regulations before listing a rental

US cities and states regulate short-term rentals differently. Violating local ordinances, such as renting without a license or exceeding occupancy limits, can result in fines and even invalidate insurance coverage. Additionally, if you live in a condominium or Homeowners' Association community, bylaws may prohibit short-term rentals entirely.
  • Obtain all licenses and permits your city or county requires for short-term rentals.
  • Follow building codes for safety and compliance; install smoke detectors and carbon monoxide alarms.
  • Consider coverage for your personal possessions, as your standard homeowners' policy may not cover items while your property is rented out.
  • For added liability coverage, you may consider getting a personal liability "umbrella" policy on top of your homeowners' insurance short-term rental endorsement or landlord insurance.

How can Gallagher help?

As your trusted insurance partner, Gallagher appreciates the nuances of personal risk in the sharing economy. When you partner with us, we can help you to:

  • Review your insurance policy and recommend solutions for short-term or long-term rentals.
  • Design coverage that protects both property and liability exposure.
  • Abide by local requirements to ensure compliance.
  • Understand the short-term rental website's policy coverage.

To learn more about our services and benefits, contact our Gallagher Personal Insurance advisors.