You Might Have Property Insurance, But is the Rest of Your Short-Term Rental Protected?

In This Article

It started with a leak.

At first, it was just a mysterious puddle forming near the bathroom. The guest texted around 7:45 p.m. “Hey! Not a big deal, but there’s some water on the floor. Maybe the humidity?”

A few hours later, it became less of a mystery. The plumber would later call it “a catastrophic misuse of modern plumbing.” Translation: The guest had flushed something down the toilet that no human being should ever attempt to flush. The working theory was either a loofah, underwear, or possibly both.

By the time I arrived the next morning, the guest had fled, the entire downstairs area was soaked, and the main water shutoff valve appeared to have been operated with a crowbar in a state of panic. The final repair bill, including drywall, subfloor, and the cursed pipe itself, was just under $9,000. The business revenue I would lose over the course of the rebuild period was another story, surpassing $16,000 at my property in just one month of peak season.

So I did what any responsible short-term rental operator would do: I called my insurance company, explained the situation, and waited for the words: “You’re covered.”

Instead, I got: “Oh… was this a paying guest? Like from Airbnb?”

And that, friends, is when I realized I had been paying for insurance, but it didn’t actually include the coverage I needed for my short-term rental business. As far as Airbnb’s AirCover goes, it turns out the marketing is great; the actual coverage, however, is completely hit-or-miss for what they decide to pay and a lack of urgency in communication. I never made that mistake again once I found Proper Insurance, but I need to finish the story first.

Property Insurance is Not Business Insurance

Most hosts think, “I’ve got insurance, so I’m covered.” And sure, your property might be insured for personal or tenant use. But does it include coverage for your short-term rental business? Not so much. I was one of them—I found out the hard way.

Traditional homeowners and landlord policies are designed for long-term tenants or owner-occupants. They rarely cover vacation rental guest-related damage, often exclude or limit liability coverage, and typically offer little to no reimbursement for lost income, especially if the property is being used as an active income-generating business, such as a short-term rental.

In my case, the insurer asked if the guest who reported the leak was “a tenant on the lease.” When I said it was an Airbnb guest, their tone changed. “Oh. That may not be covered.”

Spoiler alert: It wasn’t.

Come to find out, every policy carries a “property entrustment” or “dishonesty exclusion,” meaning that when you hand your keys to a guest, traditional insurance coverage can be completely null and void. This policy language gives the insurer the right to deny a claim, even something you assume would be covered, like guest-caused water damage.

When trying to contact Airbnb’s AirCover for support, the communication was challenging, to say the least. My claim kept making its way through the inboxes of multiple “specialists”, with no real resolution offered. This ultimately cost me time, money, and my sanity.

Common Short-Term Rental Insurance Mistakes

Your Airbnb isn’t just a house with cute pillows and a clever guestbook. It’s a business with a rotating door of new guests on a weekly, sometimes daily basis. You’re generating active income, managing expenses, and offering a hospitality experience, whether you see it that way or not. And like any business, you’ve got something that can bring the whole operation to a screeching halt: exposure.

You’re one guest accident, one electrical short, or one plumbing disaster away from severe damage, both physically and financially. Maybe it’s a group of teenagers that head out for a midnight swim at your lakefront property, not thinking they should bring life preservers down to the dock. Perhaps it’s a bachelor party that turns the fire pit into a science experiment. Or maybe it’s something simple, like a guest slipping on wet tile and claiming there were no bath mats in sight. 

These are not rare events. They’re the kind of things that happen every week across thousands of short-term rentals and the unfortunate scenarios that traditional homeowners and landlord policies were never designed to handle.

It’s not that hosts are careless. Most are doing their best to cover the basics. They pay for some kind of insurance that the trustworthy local agent told them was a good price and should work for short-term renting. But insurance is complicated, and when you’re busy managing bookings, guest messages, and turnovers, reading the fine print on your policy usually ends up at the bottom of the to-do list.

This is why short-term rental owners need coverage that aligns with their business operations,  not something built for long-term leases or supplemental protection stacked on top of the wrong base policy. You need insurance that understands your calendar is full, your guests are rotating constantly, and your property operates like a boutique hotel without a front desk.

The Better Way: Insurance Designed for STRs

Proper Insurance exists because short-term rentals carry far greater risk than a personal property or long-term rental. And the risk of something going wrong? It’s not rare – it happens daily.

Proper Insurance built a policy that completely replaced inadequate homeowners and landlord coverage, offering protection not just for the building, but the rest of your short-term rental business too:

• Guest-caused property and contents damage, even when it’s accidental, intentional, or malicious, including theft and vandalism
• Protection for lost revenue during covered business interruption
• Liability protection if a guest gets hurt or hurts someone else during their stay at your property 
• Liability coverage for amenities, like fire pits or pools, and extends off-premises to include bicycles, golf carts, waterfront properties, and more
• Coverage remains in place for short-term and mid-term renting, personal use, and periods of vacancy
• Unique enhancements for industry-specific risks like liquor liability, bed bugs, fleas, squatters, and more.

This is the kind of policy that doesn’t panic when you say the word “Airbnb.” They expect it.. Their dedicated risk managers will take the time to walk through your online listing, understand your risks, and offer coverage that aligns with the unique exposure and business needs of your short-term rental property.

With Proper Insurance, short-term rental hosts can have peace of mind, knowing their business is safeguarded against a wide array of potential issues.

Final Thought: Don’t Wait Until the Leak 

I thought I was covered. I really did. Until I wasn’t. And standing in a half-gutted bathroom trying to figure out if I could write off $25,000 in repairs and loss of revenue as “education” is not the moment you want to learn your policy doesn’t apply. Reach out to Proper Insurance to make sure you are covered the right way for STRs and don’t have to learn the hard costs of toilet flushing like I did. Proper’s Super Agents specialize in short-term rental insurance and are ready to offer you more than just a quote. They will provide you with a complimentary coverage consultation and a risk assessment of your property. 

So if you’re running a short-term rental business, protect it like one. That means insurance that responds when things go wrong. Because when something leaks, breaks, or burns, you don’t want your only plan to be towels and a “lol.”