Anything can happen in a vacation rental. And sometimes, anything does happen.
The rental nightmares range from small annoyances, like ant infestations, to big ones, like floods. As a consumer advocate, I’ve seen it all.
Ants were my unwanted roommates in an apartment in Athens this summer. No sooner had I put a slice of baklava on a plate than they surrounded it, ready to take it down. And by “take it down,” I mean like those giant red ants in Indiana Jones and the Kingdom of the Crystal Skull. There was no escaping them — until the vacation rental manager dispatched an exterminator.
I’ll never forget the cabin in Pennsylvania that nearly washed away in a flood a few summers ago. After a flash flood, I thought my car would float down the nearby river. Fortunately, it didn’t.
Whenever I think about these disasters, I wonder: Would travel insurance have made any difference?
Sometimes the answer is yes. And it turns out travelers have been thinking the same thing lately.
“With domestic travel on the rise, we’ve seen increased demand from travelers looking for stand-alone vacation rental damage coverage,” says Katie Crowe, a spokeswoman for travel insurance company battleface.
But is insurance even necessary for a vacation rental stay? What does it cover, and how is it similar to — and different from – regular travel insurance?
Yes, you probably need insurance for your vacation rental
If you’re staying in a vacation rental, travel insurance is a must, says Christina Tunnah, the global general manager for World Nomads Group. After all, you’re probably staying in a home worth hundreds of thousands of dollars.
“Travelers need to be 100% sure of the liability they have should they damage a home,” she says. “What happens if they accidentally reverse your car into a fence? Does the homeowner’s home insurance cover them for that?”
The answer is: not always. Fortunately, some individual travel insurance plans have coverage for third-party liability. That’s worth looking into when you rent a vacation home, she says.
But that’s not the only reason to consider insurance. Angela Borden, a product marketing strategist with Seven Corners, says most travelers renting a vacation home or apartment are concerned with protecting the money they spent on the rental and airfare.
“These expenses typically represent the bulk of the cost of a vacation for this travel scenario,” she says. “Considering this, travelers should carefully review the travel insurance plan document, focusing on the covered reasons for trip cancellation.”
Two types of insurance coverage for your vacation rental
“It’s important to distinguish between two types of insurance for vacation rentals,” says Stan Sandberg, the co-founder of travel insurance site TravelInsurance.com.
Trip cancellation coverage
A travel insurance plan with trip cancellation coverage can protect those costs if a policyholder has to cancel for a covered reason such as unexpected sickness, including for COVID, or hurricanes,” says Sandberg.
Rental damage coverage
If something happens to your rental while you’re in it — say, you spill red wine on the white shag carpet — damage coverage can help cover the costs. Note that coverage doesn’t include intentional damage, like a raucous party.
Both are becoming more popular, says Sandberg. “We’ve seen a significant increase in travel insurance purchases to cover prepaid and non-refundable vacation rentals,” he says.
How does travel insurance cover vacation rentals?
Most vacation rental coverage is included in a broader travel insurance policy. Here are some of the types of coverage you can get:
- Protection against accidents while renting a property, such as spilling wine on a carpet, breaking a lamp or window, or damage caused by your pet.
- Trip cancellation benefits, which cover unplanned hotel night if your flight or train is delayed or canceled.
- Emergency medical and evacuation expenses. This is particularly important for international trips, where your health insurance may not be valid.
Travel insurance may also cover you for items that go missing at a vacation rental, says Joe Cronin, president of International Citizens Insurance.
“You can also make a claim on your homeowner’s or rental insurance, but making a claim can cause your premium to go up,” he says. “Therefore, your travel insurance is your first line of defense.”
I have details on how to find insurance coverage — and avoid a vacation rental nightmare — in my comprehensive guide to vacation rentals.
What doesn’t travel insurance cover for vacation rentals?
Unfortunately, travel insurance doesn’t cover everything. Here’s a list of items your insurance won’t cover:
- If you have second thoughts about staying in a rental (unless you have a more expensive “cancel for any reason” policy).
- Any financial scams related to vacation rentals, such as wiring money or having your personal information stolen by phishing.
- Damage caused intentionally, usually as the result of a party.
- Disputes with a host or platform over missing amenities that lead to missing nights. Travel insurance usually doesn’t cover a hotel if you check out early.
This is only a partial list of items not covered by travel insurance. Remember, travel insurance names the perils for which you’re covered. If it’s not specifically named, there’s no coverage for it.
What’s the most common kind of insurance claim?
Of all the coverages you can get with your travel insurance policy, the most important one may be for trip cancellation.
“Trip cancellation is still, by and large, the number one type of claim for any type of vacation — vacation rental included,” says Carol Mueller, a vice president at Berkshire Hathaway Travel Protection. “In addition to the standard trip cancellation coverage, vacation renters are also interested in making sure the plans they do purchase include security deposit protection, should unexpected damage to the property occur.”
One of the best-kept secrets about travel insurance is that it may cover nonrefundable costs if a destination becomes uninhabitable, according to Daniel Durazo, director of external communications at Allianz Partners USA.
“If a vacation rental is located where a natural disaster has occurred, it may become uninhabitable due to loss of power or water,” he says. “Be sure to document the problems and then file a claim with your travel insurance company for your nonrefundable costs, which may include the cost of the rental and travel charges.”
Travel insurance covers more than vacation rentals
Most travel insurance policies aren’t specifically designed for vacation rental guests. But they cover perils that may affect a guest.
Say you’ve got a vacation rental on the ocean, and the beach closes. Your travel insurance might cover that.
“Some travel insurance plans have benefits for travel inconveniences that can pay up to a stated maximum benefit amount for situations like a beach closure if the beach at the traveler’s destination is closed by government authorities for 24 hours or more,” explains Sherry Sutton, vice president of marketing and communications at Travel Insured International.
You can sometimes add vacation rental damage protection to your travel insurance policy. For example, travel insurance startup Faye has a vacation rental option on any of its base plans. It covers accidental damage to your rental, like spilled wine, broken dishes, and broken appliances. All of its policies also cover rental property lockouts
“That means if the keys to your vacation rental property are lost, stolen or damaged, and you can’t access the property for three hours or more, you can be reimbursed for up to $200,” says Doron Samish, Faye’s vice president of product at Faye.
Who needs insurance for their vacation rental?
I spoke with several travelers who bought travel insurance for their vacation rental. They said that while they were worried about a vacation rental nightmare, they were just as interested in other coverage that insurance offers.
For example, Colleen Carswell, a security specialist from Bel Air, Md., just bought a policy through Allianz Travel Insurance for a beach rental. The policy covers the usual perils, like lost luggage and trip interruption.
“What we have personally found most beneficial about travel insurance is the medical coverage,” she told me. “We went on vacation a few years ago when my husband needed to go to the emergency room. And another time, my one-year-old had to go to urgent care. Both times we were out of our health insurance network.”
The Allianz policy covered them.
Buying advice for vacation rental insurance policies: read carefully
One final note: You’ll want to read your policy carefully before you buy.
“The best advice here is to review the plan benefits before buying,” says Brian Rock, national director at VacationGuard.com. “Some plans require all people be named. Other plans automatically extend protections for travel companions.”
True, that. I’ve seen far too many “gotchas” during the claims process, where someone forgot to name everyone on the policy or overlooked some other seemingly insignificant detail. Because believe me, if you ever have to file a claim on your vacation rental stay, your travel insurance company won’t overlook any detail.