Airbnb Insurance 101:

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Over the last two years I've learned countless lessons about what it takes to run a successful short-term rental (STR) business. One lesson thats stands out: insurance is not optional. Protecting your properties and your business from unforeseen risks is crucial. Here I’ll share why insurance is essential for your Airbnb arbitrage journey, what to look for in coverage, and who to hire to protect your investments!

Why Insurance Matters in Short-Term Rentals

Operating an Airbnb arbitrage business involves unique risks compared to traditional rental properties. Without the right insurance, a single event could cost thousands of dollars—or worse, your entire business. Here's why it matters:

1. Property Damage
   Guests come and go, and accidents happen. Spilled wine, broken furniture, or a kitchen fire can lead to costly repairs. While Airbnb offers Host Guarantee protection, it has limitations and may not cover all damages. Having your own policy ensures comprehensive coverage.

2. Liability Coverage
   Imagine a guest slips on wet tiles in your bathroom and sues you for medical expenses. Liability coverage protects you from legal costs and settlements. Without it, these expenses could bankrupt your business.

3. Loss of Income
   If a property becomes uninhabitable due to damage, such as a fire or flood, you lose rental income. Many insurance policies offer "business interruption coverage," which compensates you for lost revenue during repairs.

4. Local Regulations
   Some cities require STR operators to have specific insurance policies to comply with local laws. Staying insured can help you avoid penalties or business shutdowns.

What to Look for in an Insurance Policy

Not all insurance policies are created equal, and traditional homeowner’s or renter’s insurance often won’t cut it for STRs. Here's what you need in a policy:

• Commercial Liability Coverage: Protects against guest injuries or damages to third-party property.

• Property Coverage: Covers physical damage to your unit, furniture, and appliances.

• Business Interruption Insurance: Ensures you’re compensated for lost income during repairs or unforeseen closures.

• Host-Specific Insurance: Some companies offer policies tailored specifically to Airbnb or vacation rental hosts.

Review the fine print. Make sure the policy explicitly covers short-term rentals—some insurers exclude STR operations in their standard coverage.

Who to Hire for STR Insurance

When it comes to finding the right insurance provider, it's essential to work with companies or brokers that specialize in STR insurance. Here are a few to consider:

1. Proper Insurance
   Proper Insurance is one of the leading providers in the STR industry. They offer comprehensive policies that replace traditional homeowner or renter insurance while covering all the risks of STR operations.

2. Slice
   Slice offers on-demand insurance, allowing you to purchase coverage only for the nights your property is rented. It’s a cost-effective option for hosts starting with a few units.

Pro Tips for Navigating STR Insurance

1. Bundle for Savings: If you have multiple properties, look for insurance providers that offer bundled policies to save money.

2. Check Coverage Overlaps: If you already have coverage through Airbnb or Vrbo, review what’s included and fill the gaps with a private policy.

3. Document Everything: Take photos of your property before and after every booking. This documentation can be crucial when filing claims.

4. Consult Experts: Work with an insurance broker familiar with the STR industry to ensure you’re fully protected.

Insurance might feel like an extra cost when you’re starting out, but trust me, it’s an investment in your peace of mind and long-term success. Managing 48+ properties across four states, I’ve seen firsthand how the right coverage can protect your business from costly risks.

Let me know if you want more tips or have specific questions about insurance providers!

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Hailie ❤️