What You Need to Know about Short-Term Rental Insurance Cost and Coverage

Short-term rental insurance isn’t one-size-fits-all, and that’s a good thing. Your costs reflect how you run your rental, from location and guest turnover to on-site amenities. Some hosts pay less than the price of a single booking, while others invest more to match their property’s unique risks. 

This guide breaks down what influences your rates and how to get the right coverage without overspending.

What is Short-Term Rental Insurance?

A short-term rental insurance policy protects property owners who rent out homes, condos, or even spare rooms for days or weeks—think Airbnb, Vrbo, or holiday cottages. It fills the gaps uncovered by a standard homeowners' or landlord policy, giving hosts confidence that the building and incoming guests are covered.

Average Cost Of Short-Term Rental Insurance Per Property Type

Looking for the best short-term rental insurance? Check out the 10 best short-term rental insurers you can consider. 

What Does Short-Term Rental Insurance Cover?

Short-term rental insurance fills the gaps that a standard homeowners or landlord policy leaves open when guests stay overnight. Most policies bundle four core protections and let you add extra layers for special risks.

Popular Add-Ons

• Guest Medical Payments: Pays small medical bills (usually up to $5 000) without a lawsuit
• Liquor Liability: Covers claims tied to alcohol-related injuries if you allow parties or supply beverages
• Amenity Liability: Extra limits for pools, hot tubs, docks, or watercraft
• Equipment Breakdown: Fixes HVAC, refrigerators, or smart-home systems that fail suddenly
• Bedbug & Pest Remediation: Covers extermination and lost income from cancelled stays
• Cyber & Identity Theft: Protects booking records and guest data if your listing platform account is hacked

Quick Checklist Before You Buy

1. Match the dwelling limit of your rental insurance policy to the full rebuild cost for current construction prices.
2. Choose liability limits that mirror or exceed your net worth to avoid personal exposure.
3. Confirm the platform’s “host guarantees” are secondary and do not replace real insurance.
4. Ask about occupancy-based pricing so you only pay the full premium for booked nights.

With the right mix of core coverage and targeted endorsements, short-term rental insurance keeps the property and your income stream safe from the unexpected.

How to Insure Your Vacation Rental Home?

Securing the right policy for your property is easier than you might think. Here is a straightforward guide on how to properly insure your vacation rental home and protect your business.

Step 1: Tell your insurer you host guests

Once you accept payment, the home counts as a business use. A standard homeowners policy can refuse claims, so request a short-term rental endorsement or a purpose-built policy.

Step 2: Pick a policy that matches your booking style

• Full-time short-term rental policy, always in force and ideal for year-round listings

• Per-booking or home-sharing rider, active only when a reservation appears on your Airbnb or Vrbo calendar

Step 3: Choose solid coverage limits

Match the dwelling limit to current rebuild costs, list your furnishings at replacement value, and set liability equal to your net worth. Add riders for pools, liquor service, bedbug treatment, or equipment breakdown if they apply.

Step 4: Share occupancy data when required

Per-night programs link directly to booking platforms or ask for monthly reports. Accurate data keeps rates fair and avoids disputes later.

Step 5: Welcome guests knowing coverage is live

During each stay, the policy protects the building, contents, and your liability, and it can replace lost rental income if a covered event forces cancellations.

Step 6: Act fast if something goes wrong

Take a picture to claim for rental property damage or tenant injury, collect receipts and the booking record, and file it within the time stated in your policy (often 48 to 72 hours). The insurer deducts your chosen deductible and pays out based on replacement cost or actual cash value, whichever you selected.

Step 7: Collect income reimbursement while you repair

Most short-term rental policies send weekly checks or direct deposits for lost bookings until the property is guest-ready again.

Step 8: Review and update every year

Renovations, new amenities, or higher nightly rates can leave you underinsured. Recalculate dwelling value, contents, and income at each renewal.

Quick host tips

• Keep a photo inventory of every furnished room for faster claims.
• Install smart locks, smoke and carbon monoxide alarms, and exterior cameras; many insurers give security discounts.
• Read how your policy coordinates with Airbnb AirCover or the Vrbo host guarantee, so you know which one pays first.

Homeowner’s Insurance vs. Landlord Insurance vs. Short-Term Rental Insurance

When you rent out a property, a standard homeowner's policy isn't enough, but a typical landlord insurance policy coverage may not be the right fit either. Let's compare these three distinct types of coverage to see which one properly protects your rental business.

How Much Short-Term Rental Liability Coverage Should an Owner Carry?

No single coverage amount works for everyone, but insurers and local regulations follow a standard protection progression. Use the checkpoints below to determine how much coverage makes sense for your property.

1. Meet the hard minimums

• Most booking platforms give you only a secondary layer of $1 million. Airbnb’s Host Liability, Vrbo’s Premier Host, and Booking.com Partner Liability all stop at that figure.
• Dozens of cities now make a $500,000–$1million policy a license requirement. For example, Houston’s 2025 ordinance and Denver’s short-term rental license insist on $1 million; San Francisco asks for at least $500 000.
• Specialist insurers such as Proper start every policy with $1 million per occurrence and let you buy up to $2 million on the base contract.

2. Match the limit to your net worth

Add the equity in the property to your savings and other assets. Carry at least that amount in total liability so a court award cannot touch your personal finances. If your assets top $1 million, you have already outgrown the platform guarantee.

3. Add an umbrella for absolute protection

Insurance advisers who work with landlords, like us at Obie, usually recommend an umbrella of $2 million – $5 million when you own rental property. Policies are sold in $1 million blocks and cost about $200 – $400 for the first block, then roughly $100 for each extra million. Most carriers ask that your underlying policy carry at least $ 300,000 in liability before the umbrella can sit on top.

4. Bump the limit if you have extra risk factors

Pools, hot tubs, docks, beachfront access, alcohol service, bachelor-party bookings, large sleeping capacity, or high nightly rates increase the chance of a seven-figure claim. In these cases, insurers often recommend going to the next umbrella tier.

5. Keep legal fees outside the limit

Choose a policy that pays defense costs and the stated liability amount. Attorneys can quickly exhaust a $1 million limit that includes legal fees.

How Your Short-Term Rental Insurance Claim is Calculated

Figuring out how a short-term rental insurance payout works is pretty simple. Different situations call for different types of coverage, but the math is usually straightforward. Let's walk through a few examples to see how you get paid for a covered claim.

Example 1: Guest Damages Your Property

This is the most common type of claim. Imagine a guest accidentally breaks your living room television, and a new one costs $900. You check your policy and see that you have a $250 deductible for property damage. The deductible is the part of the claim you pay out of pocket.

Here’s how the math works:

• Cost to Replace the Item: The TV costs $900 to replace.
• Your Deductible: You are responsible for the first $250.
• Insurance Payout: Your insurance company covers the rest.

The calculation looks like this:

$900 (Cost of TV) − $250 (Your Deductible) = $650 (Insurance Payout)

You would receive a check for $650 from your insurance provider to help you buy the new television.

Example 2: A Guest Is Injured (Liability)

Your coverage also protects you if a guest gets hurt. Let's say a guest slips on a rug and sprains their ankle. They have $1,500 in medical bills. Your short-term rental insurance policy includes liability coverage with a $500 deductible.

Here’s how you’d figure out the payout:

• Guest’s Medical Bills: The total cost is $1,500.
• Your Liability Deductible: You pay the first $500.
• Insurance Payout: Your policy pays the remaining amount.

The calculation for this liability claim is

$1,500 (Medical Bills)−$500 (Your Deductible)=$1,000 (Insurance Payout)

Your insurance company would pay $1,000 directly to the guest or the medical provider to settle the issue.

Example 3: You Lose Rental Income

What if damage from a burst pipe makes your rental unusable for a month? You have to cancel reservations and lose money. Your rental policy can help cover this lost income.

Suppose you lost $3,000 in confirmed bookings while the property was being repaired. Your policy has a $200 deductible for loss of income coverage.

Here's the breakdown:

• Total Lost Income: You missed out on $3,000.
• Your Deductible: You absorb the first $200 of the loss.
• Insurance Payout: Your provider covers the rest of the lost bookings.

The final calculation is

$3,000 (Lost Bookings)−$200 (Your Deductible)=$2,800 (Insurance Payout)

In this scenario, your short-term rental insurance helps you stay financially stable by paying you $2,800 to cover the income you lost.

Cut Your Short-Term Rental Insurance Costs with Obie

Stop guessing what protection should cost. Obie compares top carriers in seconds and shows real, binding prices tailored to your property, guest volume, and amenity list: no hidden fees, no endless forms. Get a free, instant quote and keep your cash flow strong today.

FAQs about Short-Term Rental Insurance Cost

How does short-term rental insurance protect against guest injuries?

Your liability coverage pays the guest’s medical bills, legal defence costs, and any settlement, shielding your personal assets and future rental income.

What risks are unique to vacation-rental hosts?

• High guest turnover boosts the chances of accidental damage
• Theft
• Rowdy parties and 
• Last-minute cancellations that can cut into your income

Does STR insurance cover hot-tub or pool liability?

Usually, yes, provided you declare the amenity. Insurers often require safety gear such as fences or covers, and an endorsement may raise your liability limit.

Do I need special insurance for Airbnb or Vrbo properties?

Absolutely. Standard homeowners or landlord policies exclude business use, so a short-term rental endorsement or standalone policy is essential and works alongside each platform’s limited host guarantee.