Jon Bell:                                00:00                     In this episode we’re talking all about vacation rental insurance and why it’s so important for your business. So stay tuned.

Jon Bell:                                00:07                     Vacation rental machine helps. So suggests like you learn how to start, grow and scale your short term rental business. The show’s all about creating systems that help you automate your business. You have any more time and money freedom. If you’re ready to start living the vacation rental life that subscribed to this podcast today, come and join us on our Facebook group, the host nation where we’ll be talking about starting automating and scaling a short term rental business. Now onto the show. Hey, welcome back host nation to another.

Jon Bell:                                00:33                     So the vacation rental machine. In this episode we are talking all about an important part of your business, which is vacation rental insurance. Now I know a lot of you, you might be using this for your primary home. You might be just using your regular home insurance policy and you might be thinking, well, I don’t need any additional service or insurance because Airbnb also has this host guarantee that they keep on claiming about and they say it’s up to a million dollars and you know, makes you believe that you can just go with this and that you can use your primary or you can use a cheaper insurance and that you will be fine. So in this episode we’re going to be breaking down your primary home insurance, vacation, rental insurance, supplemental insurance, and then the Airbnb insurance and the differences about them and which one is best for you.

Jon Bell:                                01:20                     So to start, we just have to lay the foundation that using your primary home insurance is probably not going to cut it. And the reason is, is because when you are letting people stay in your home and you’re receiving income, you are operating a business. Even if you are just letting someone just stay in a room and let’s say someone uses the kitchen stove and then the house catches on fire, your insurance is going to look at that and they’re gonna say, you know, who was this person? Why are they staying here? Were you receiving money from them? Let’s say that you are renting out a space and someone starts a fire and it catches the whole house and you need to put in a claim. Those claim agents are going to go and they’re going to find out all the details about, you know, what were you doing?

Jon Bell:                                01:59                     Who was this person? Why were they here? Where have they gone? You know, what’s the relationship? And if they find out that someone was staying there and you are conducting a business, you’re letting someone stay short term and they didn’t have a type of rental agreement and you were just conducting your short term rental business, they could very well not pay you out because of the fact you are conducting a business. So just using your primary home insurance is probably not the best bet. And if you think that you can just get by and you know, try to save a few dollars here or there, then you know if something does happen in which insurance is supposed to be there too, protect you when these major things do happen, not for the minor things, the minor things, you might probably just have to pay for those things because that’s part of the business.

Jon Bell:                                02:41                     But if something big does happen and you know, accidents do happen, you don’t want to be liable for however much it is going to cost to be able to replace your home. So John, if you wouldn’t mind talking a little bit about vacation rental insurance and what’s the difference between that and your regular home insurance? Vacation rental insurance is very specific to this space and it’s what you need to operate as a full business. So we’re all professionals and we’re running a business here. We want to make sure that we have the right coverage. The right coverage in this space is vacation rental insurance. You can’t really get around it, right? We want to make sure that in the same scenario that you just gave, that if our guests burned the house down, that we won not only fix the house but we also get paid for all of our lost revenue that we had to endure just because the house had to get rebuilt.

Jon Bell:                                03:31                     And a lot of those scenarios, if we’re using just our regular homeowners insurance, we’re not getting that back. I mean we’re talking about our revenue that we have collected over a period of time that we have trends that might be two times to two and a half times the actual rent amount. So if it burns down, you’re not hurting. That’s one of the biggest advantages of short term rental insurance. And like John was saying, you are conducting business so you do need the proper insurance for that. But let’s say someone slips and falls on your property. I mean is your insurance is not going to be covering if someone you know falls over but they very well could Sue you. And that’s why as a business owner you also need to have some type of general liability insurance because you are conducting a business so you need some type of liability insurance to be able to conduct some type of business and this really just covers all your bases so that if a guest does burn the house down and you go without a home and you’re going out without that loss of income or if this is just another property that you are managing, being able to recoup that loss and build that property up again and be paid out is an important part of the business.

Jon Bell:                                04:39                     And if someone does get hurt on your property and they do want to see you having some type of general liability, some type of business insurance that does protect you in the case that someone does want to Sue you, then you will also need that as well. One of the big things that gets a lot of people in trouble and they think, well I don’t need vacation rental insurance. I can just use maybe an insurance like lemonade or their regular home insurance and be able to save the few extra dollars, which in the end really isn’t that much more than your primary home insurance. It is a business insurance, so it is going to cost you more, but it does save you so much more headache and it could save you potentially hundreds of thousands of dollars in the long run. So getting the proper insurance, but Airbnb also has this insurance called the host guarantee, the a, they they claim up to a million dollars of protection. John , what’s been your experience with this host guarantee and would this be something that you would rely on as just kind of being your primary insurance?

Jon Bell:                                05:34                     Absolutely not. Airbnb provides just that little bit of gap insurance that covers just when a guest messes up something, it’s not really going to replace that loss of income that you’re going to have just because of what they did. If you’re not able to just resolve things quickly and you go and you have to have all these repairs done, it’s at your expense to make all of those

Jon Bell:                                05:58                     fees and whatever bills that you have that all right, I need to get paid in that interim time. Airbnb doesn’t care about that. Nor does any of the other platforms host guarantee. You also have to file a claim for each

Jon Bell:                                06:10                     incident. And when you do that,

Jon Bell:                                06:13                     sometimes Airbnb or some of the other providers, they respond back to you via email. I’ve had some trouble in the past where they send me an email, maybe I’ve waited two weeks for them to contact me and they send me an email one day and they send it with a 24 hour response time. And if I don’t respond within 24 hours, the entire thing is dropped.

Jon Bell:                                06:33                     Well, to me that doesn’t

Jon Bell:                                06:34                     really show me that they’re here for me and they support me as the host. Right? So you want to make sure that Hey, even if I find an issue two weeks later and I was able to prove that it was this guessed that my insurance is able to cover that. So you want to make sure you got the right insurance. One of the biggest things is we all are going to need insurance period, right? If we’re running in rental arbitrage, you need renter’s insurance of some sort. If you’re owning a home, you’re going to need insurance of some sort. Make sure that is just the right insurance. It’s not more expensive, it’s just you got to go talk to the right people

Jon Bell:                                07:10                     and like John was saying, you need to find the right insurance and the way that I like to look at it is like Airbnb is really for those smaller claims. Anything less than $500 you can look to Airbnb and they could very well like if someone breaks a plate, if someone stains those sheets and if you really want to go after and really nitpicking and collect every diamond dollar, you can do that. If you have the proper documentation and you follow their system, they will pay you out. But again, you might want to look at that as being maybe just the cost of doing business for those little things every once in a while. But generally I like to say Airbnb is going to be within that $500 range from $500 to $1,000 this is what we call supplemental insurance and your supplemental insurance is going to be things like property protect, which is a guest that we had on the short term rental success stories and she does a really good job, a Kate Burch explaining what supplemental insurance is as she’s the the founder of property protect.

Jon Bell:                                08:02                     So that’s definitely a good episode that you want to listen to. Where are we going into more detail about that. But supplemental insurance is going to cover you between that five to $1,000 and it’s going to cover things that you know, maybe someone punches a hole in the wall and maybe you don’t want to put in a full claim, which could cost you $1,000 because your primary vacation rental insurance and your primary homeowners insurance, they start at $1,000. So if someone just puts a hole in the wall, you know it’s going to be within that period where it’s like you shouldn’t really be putting in $1,000 claim and Airbnb might not pay you for like having a handyman or contractor go out and patch that wall. So having that wedge insurance that supplemental insurance really can help you out. But it is one of the downsides is that it can be a little bit more expensive and they typically do it per booking so you could end up spending twice as much money for supplemental insurance if you choose to that route just all the way and keeping your primary home insurance and using a supplemental insurance, it can cost you more.

Jon Bell:                                09:01                     But let’s say that you are seasonal and maybe you don’t want to pay for a full year. Maybe it makes sense to go with a supplemental insurance that can cover you within maybe those periods where you’re not able to list all year long so that’s supplemental insurance. What you’re saying is between that five to a thousand dollars after that thousand dollars then you want to have your primary vacation rental insurance that is going to protect you in the case of emergency, not for small little claims, not for anything that’s less than that. You really want it for those major things and the company that we go through is proper insurance. They are really reputable, they’re really good. They cover that loss of income, the answer, all your questions and we actually did an episode with them on short term rental success stories that you definitely want to check out because I actually interviewed the founder Darren Pettyjohn and he goes into a lot of depth about everything that proper insurance does cover and it was really in depth and they cover so many cool things so you really want to check out that episode.

Jon Bell:                                09:56                     If you want to know and fully understand the real key differences between your primary and your vacation rental insurance because there are a lot of differences that we’re not even going to be able to cover in this episode because that was like an hour long interview, so I’ll include the episode just right here. We’ll include it in the description box as well for that episode and if you want to go check out property, you can give them a call and they can just talk and answer your questions. Then go to shortterm sage.com backslash proper and you can give them a call. It won’t cost you anything and they can answer all of your guys’s questions. They’re really good about that, about educating people in the space because that’s what their primary job is. But like any insurance, you do want to call around and get quotes.

Jon Bell:                                10:36                     I started with my regular home insurance and my primary home insurance and I called them and I said, Hey, this is my plan. What I’m planning on doing with light property and you know a lot of them are, they’re probably going to be like, well I don’t know what to do with this. Or maybe they do know what to do with this but they haven’t set something in place so it might cost you more. Some of them might not cover certain types of activities so you definitely want to shop around. But if you want that full coverage that full like they are in the business of this type of business, then you definitely want to look and shop for vacation rental insurance. And the one that a lot of people use John and I as well is proper. So definitely go give them a call. If you have any questions then they are happy to answer. So John, because we are building this vacation rental machine, we’re not just subleasing properties with rental arbitrage or we’re not just purchasing properties and turning them into short term rentals. We are also managing other people’s properties. So what type of insurance would you be getting if you are managing other people’s properties?

Jon Bell:                                11:31                     Do you know it’s very important that you get the homeowner to have the right insurance. It’s not really on you to have it, but you got to make sure that they’re covered. Do you want to recommend that they get the same insurance that you would use if you had the rental arbitrage method or you own the property? You want to make sure that they get proper vacation rental insurance, they’re liable to just go ahead and cancel.

Jon Bell:                                11:56                     There are other policy that they already have their homeowners policy because this does fill that gap as well. If they refuse, if they say, no, I don’t want to do that, or already got a landlord policy, you should take other measures to make sure that you can cover them in some sort of way. That’s maybe where that supplemental insurance can kind of fill in. So talk to them, give them links, make sure you inform them on what they need to have to be properly covered. We don’t want to make the mistake and not saying anything about it just because we were Cola hosting, but we want to make sure that the property’s covered and everybody still in good shape at the end.

Jon Bell:                                12:33                     Yeah. This is a business where it is very heavy on education, so you should consume all this education consumed the resources, like the success stories podcast, the interviews, because you’re going to have to be able to go up to an owner and be able to sell them this business and then also let them know about why they need the certain products. So an important thing to know is that because you are managing someone else’s property, you do have a certain level of responsibility. So you do want to get added onto that primary insurance so that you are covered as well as your host.

Jon Bell:                                13:04                     All right everyone. Today’s question of the day. How much do you think vacation rental insurance cost? Leave the comments down below

Julian Sage:                         13:12                     Anduntil next time, host nation. Keep on hosting. Hope your hosts found value in this episode. If you did, please go on over to iTunes and leave us a review if that would greatly support the show. If you’d like to connect with John the community, and I then go on over to our Facebook group, the host nation, talk to you host on the next episode. Keep on hosting.