The insurance a short-term rental business needs, and the cost of it

What to take away

The coverage a homeowners policy leaves out

A homeowners policy is written for a dwelling occupied by its owner. Rent it nightly and the risk changes, and the policy either excludes the business use or voids on non-disclosure.

The gap is quiet. Premiums keep clearing, nothing is cancelled, and the difference surfaces at claim time when the adjuster asks what the property was doing that night.

So the first job is not shopping. It is naming what has to be covered, then asking a broker to price each piece.

The coverages and the insurers that write them

Commercial general liability (CGL). Covers bodily injury and property damage to third parties: a guest who falls on the stairs, a neighbor whose fence your contractor knocks down. Limits are quoted per occurrence and aggregate, commonly $1M per occurrence with a $2M aggregate. A CGL policy written for a rental operation is the base layer.

A DP-3 or commercial property form. A DP-3 is the dwelling form built for rented residential property. It covers the structure and, on some forms, contents and loss of use.

A commercial property form does the same job for a building run as a business, and it is the usual choice once you hold several units or common areas.

Neither is automatic. A homeowners HO-3 will not do the work.

Business income and loss of rents. Pays the income you lose while a unit is uninhabitable after a covered loss. Ask for the indemnity period in writing, because 12 months and 12 weeks are different policies. This is the coverage that decides whether one burst pipe costs you a season.

Commercial umbrella. Sits above CGL and property limits and responds when a claim exceeds them. A serious injury claim can pass $1M. The umbrella is the cheapest way to buy the next $1M or $2M of limit.

Workers compensation. Required in nearly every state once you have employees. It covers injury to the people cleaning and maintaining your units, and a property policy does not. Whether your cleaners are employees or contractors is a classification question for your state labor authority and your CPA.

Crime and EPLI. Crime covers theft of guest funds or property by someone you trusted with access. Employment practices liability covers claims of discrimination or wrongful termination once you have staff. Both are optional until the first incident, then not.

Commercial auto or hired and non-owned auto. If staff drive between units, a personal auto policy usually will not respond for business use.

Five insurers write these forms. Proper Insurance sells stand-alone short-term rental policies with commercial liability and loss of rents. Steadily and Obie quote landlord and short-term rental coverage online. Safely and Slice sell per-booking liability products for hosts. Availability and appetite vary by state and property.

the license requirements audit is where the classification and permit side of this sits, and it is worth reading before you bind anything.

What short-term rental insurance costs

No page can quote your exact premium. Publicly filed rates and carrier quote pages do give workable ranges as of 2026. A single-unit short-term rental package typically runs about $1,500 to $4,000 a year in most markets. Coastal, wildfire or hail exposure can push it past $6,000.

Property premium is a rate per $100 of insured value. Typical short-term rental dwelling rates run about $0.40 to $1.20 per $100. A $400,000 dwelling therefore costs about $1,600 to $4,800 a year. Coastal or wildfire rates can exceed $1.50 per $100, or $6,000 on the same dwelling.

Commercial general liability for a rental operation typically runs $500 to $1,500 a year for $1M per occurrence and $2M aggregate. Some package policies include that limit in the property premium.

Business income and loss of rents is often 10% to 20% of the property premium. If quoted on revenue, typical rates run 0.5% to 2% of gross rental revenue. A $60,000 revenue year costs roughly $300 to $1,200.

A $1M commercial umbrella typically costs $300 to $800 a year. A $2M limit runs about $500 to $1,500.

Workers compensation is rated per $100 of payroll. Cleaning and maintenance class codes often run about $1.50 to $4.00 per $100. At $30,000 payroll, that is $450 to $1,200 a year.

Crime coverage typically costs $250 to $1,000 a year. EPLI for a small staff runs about $500 to $2,500 a year. Commercial auto or hired and non-owned auto typically costs $1,200 to $3,000 per vehicle a year.

Per-booking products from Slice and Safely have advertised starting points around $5 to $10 per booking for liability cover. Annual policies are quoted separately.

A pool, a wood stove, a hot tub or a trampoline raises the property rate. Coastal, wildfire and hail zones raise it again. A prior claim raises it for three to five years on most carrier guidelines.

For current figures, the sources are your state insurance department's rate filings, the NAIC's annual property and casualty report, and any carrier's own filed rates. A broker quoting a number without your occupancy nights, turnover count and claims history is quoting a different property.

What to send a broker

Do not ask whether they cover short-term rentals. Send a description and ask for a written position against it.

Describe the property, who owns it, and whether you own, lease and re-let, or manage for an owner. Give nights let per year, typical stay length, and maximum occupancy.

State whether you have staff or contractors on site, and whether guests have unsupervised access to a pool or a wood stove. Note whether you hold keys or codes for properties you do not own.

That last item carries three separate exposures: access to other people's property, other people's guest data, and other people's money. A dwelling policy was never written for any of them.

Platform protection is a different thing

Platforms offer their own protection arrangements. What each provides is set by that platform's current terms, which change, and you should read the terms rather than a summary.

Two points hold for any of them. It is offered by the platform on its terms rather than sold to you as a policy, and it typically covers bookings made through that platform. Neither is a criticism. Both are reasons it does not answer the question your broker has to answer.

Treat it as a possible layer, ask how it interacts with your own cover, and never let it stand in for the written position.

The questions that have to be answered in writing

Question seven gets breached rather than disputed. Cover conditional on something you are not doing is cover you do not have.

The obligations insurance does not transfer

Insurance pays claims. It does not discharge your obligations, and two of those matter here.

How you accept and decline bookings is governed by anti-discrimination protections that differ by state and locality. The Department of Housing and Urban Development sets out the federal rights and obligations. Write your criteria down, apply them identically, and record refusals.

Accessibility obligations, where they attach, are not an insurance matter either. Whether they attach depends on how the property is operated, and the Department of Justice's ADA guide for small businesses sets out the framework. Ask counsel about your own case.

What you may say about being covered

"Fully insured" is a claim, and it has to be true in the sense a reader would take it. The Federal Trade Commission's advertising guidance for small businesses sets the ordinary standard.

The trap in this trade is telling a property owner they are protected without checking whose policy responds first. That is question five, and it is the one most likely to be tested in the conversation you cannot afford to get wrong.

Get the answer before you make the promise, and put it in the owner agreement rather than in a sentence you said once.

When to revisit it

Revisit whenever the description you sent the broker stops being accurate. This includes a new property, a new market, or a move from managing to leasing. Other changes also matter, such as these:

Also revisit before each season. The conditions attached to cover are operational, and operations drift.

New owners should set this up inside the wider compliance map, the licensing and compliance guide. Do it at the point in the sequence described in how to start a short-term rental business. Do it before the first guest, not after the first incident.

Hiring changes the picture enough to warrant its own call, which is how to hire reliable staff. Opening in a second jurisdiction restarts the question, a hidden cost covered in the expansion and market guide.

Common questions

What does this cost?

It is quoted per property, and the four lines are property rate per $100 of insured value, liability per unit or per $1M, business income as a percentage of gross revenue, and umbrella per $1M. Typical single-unit packages run about $1,500 to $4,000 a year as of 2026, with high-risk property above $6,000.

Your state insurance department's rate filings and the NAIC's annual report carry current figures. A quote without your occupancy nights and claims history describes a different building.

Can I just tell my existing insurer nothing?

No. Non-disclosure is the fastest route to an unpaid claim, and the use of the property is exactly the fact that matters. Tell the insurer what the property does, in writing, and keep the reply.

Does platform protection make my own cover unnecessary?

Ask your broker directly and get the answer in writing. Any such arrangement is governed by the platform's current terms and covers bookings made through it. It is a layer at best, and it is not a policy you hold.

Whose policy pays when I manage someone else's property?

That depends on both policies and on your management agreement, which is why it is question five and why it belongs in the agreement rather than in conversation. Ask for the owner's certificate of insurance and check that you are named.

What if my claim is refused?

Read the conditions you were required to meet, because that is the usual reason. It is also the argument for keeping inspection and maintenance records that show what you actually did.