vacation rental insurance

What Does Vacation Rental Insurance Cost?

May 10, 2022

Renting out a vacation home is becoming increasingly popular and an excellent source of income. However, it’s important to take into consideration that since you’re renting out your property for money your homeowners’ insurance won’t apply here. This is because rental properties involve more risk compared to the standard home. In that case, you’ll need vacation rental insurance.

In this article, we’ll discuss the importance of vacation rental insurance as well as the various factors that affect the cost. Let’s get started.

Why You Need Vacation Rental Insurance

This insurance protects the vacation property owner from liability risks and other damages. Unfortunately, renters don’t always treat your property with the same respect as they would their own. This can result in costly damages and even stolen items.

Here’s the breakdown of what’s covered in a typical vacation rental insurance policy:

  • Lost income 
  • Theft
  • Injury
  • Property damage (vandalism, fire, wind, hail, and water *excluding flood*)

In greater detail, it protects you in the event a guest damages your property or gets injured during their stay. Most importantly, it helps protect your rental income and ensure a steady income stream. There could be instances where your property is unlivable due to damages so this insurance will compensate you for any lost income during the time.

A comprehensive vacation rental insurance policy will act as a safety net and provide you with the best value for your money. Think about the returns rather than the initial cost. Unforeseen situations can arise at any time, so you need to be prepared.

At the end of the day, you want an affordable policy that provides the best coverage for possible damages you may incur.

What Affects the Cost of Vacation Rental Insurance?

As we discussed before, numerous factors can contribute to the cost of vacation rental insurance.

Some notable examples include:

  • The size of your property
  • Your location
  • The amenities on-site
  • Your chosen deductible
  • The replacement cost value of your property

We’ll discuss a few of these in detail below.


The more amenities you have on-site, the higher your rates will be. This is because additional features add more risk to your property. For instance, if you have a pool and one of the guests slips and injures themselves then you could be held liable.

Other items that are considered high-risk include:

  • Firepits 
  • Hot tubs
  • Trampolines
  • Gym equipment
  • And so on

 Although these features make your property more desirable, expect higher rates. 


The location of your property will greatly affect your insurance premium. For instance, is the home located near a body of water? Does your area experience frequent natural disasters, such as hurricanes, tornadoes, or floods? The crime in your area can also make your property riskier to insure.

Although a beach house in Florida would be highly desirable, expect to pay more to insure the property.


If you choose a higher deductible your rates will decrease. However, before you do this, make sure you choose an amount you’re comfortable paying. If you file a claim then you’re agreeing to pay the stated amount before your insurer steps in to handle the rest.

So, if you file frequent claims then this may not be the best option for you.


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