Roomorama Insurance FAQ’s
The recent growth of the short-term rental marketplace has led to new rules and regulations in communities which has created gaps in traditional insurance coverage. This is why Roomorama has partnered with Proper Insurance Services, LLC.
Proper offers a product specifically designed for short-term rental properties. Their team is ready to help. They can review the current coverage you carry, help explain the exposure, and get you a quote for their specialty insurance if necessary.
Below are some frequently asked questions and policy highlights:
What is considered short-term renting? In the insurance world, a property that is rented for less than 30 days at a time is typically considered short-term. A property in which the renter does not reside/live at the dwelling.
Why does my homeowner's policy not cover my short-term rental? All homeowner's policies carry a "business activity exclusion". In other words, any claim involving a "business activity" could rightfully be denied.
I have a landlord policy and have been told this covers my short-term rental, is this correct? Landlord policies also carry a "business activity" exclusion. Landlord policies are written for landlords, not business owners. A long-term lease rental is not a business. Let's use a liability example: A renter leases your home for six months. Two months later he/she "slips and falls" in the shower because there is soap scum built up on the tub floor. Does this liability fall on the landlord? No, of course not, it's the tenant's responsibility to keep a clean tub. Now, the same situation. A vacationer rents a home for a week. You better believe it's the property owner's responsibility to keep a clean tub. The vacationer assumed they were renting a clean/safe property. No different than a hotel. The liability falls on the property/business owner.
How do I get covered for business activity? You buy a business insurance policy. The Proper Insurance policy is a business policy. It covers your business property (rental home/contents), business liability, and the business income it generates.
If I insure my short-term rental as a business, can I also stay there? Yes. There are no standard occupancy restrictions on a business policy. This means the property is insured while you stay there, friends or family, and of course paying guests.
My short-term rental is also my primary residence, can I still purchase the Proper Policy? Yes. If the short-term rental home is also your primary residence, Proper simply adds $1,000,000 in personal liability and $50,000 in loss of use to relocate in the event the property is being rebuilt. This is very important if you do not carry a homeowner's policy elsewhere.
What if I also live at the short-term rental, can I still purchase the Proper policy? Yes. You have the same business exposure. Every scenario imaginable. You live upstairs and short-term rent the downstairs. You live in the main home and rent out the guest house, etc.
If I have the Proper policy do I keep my homeowner's or landlord policy in place? No. The Proper policy is designed to fully replace the current coverage you have. You would cancel your current policy.
Does the Proper policy cover vacation rental condos and homes? Yes. The Proper policy covers single family homes, condos, duplexes, town homes, and more. It does not require to be defined as a vacation rental/short-term rental etc.
What is personal liability? Personal liability is found on homeowner's policies. It covers you for personal negligence and follows you anywhere you go in the world. It's very important to carry personal liability. This is why Proper adds it to our policy in the event your short-term rental doubles as your primary residence. There is no reason to add it in the event you carry a homeowner's on another residence, as you would be "double insured".
Does my personal umbrella cover over my short-term rental? No. The same "business activity" exclusions apply as it's personal. However, standard personal umbrellas do cover over a long-term landlord property. It's not a business.
What is a commercial umbrella? A commercial umbrella is a policy that covers "above and beyond" a standard business policies liability limits. Since the Proper policy is a business policy and carries $1,000,000/$2,000,000 in commercial general liability, it does suffice as the underlying policy for a commercial umbrella. Proper sells commercial umbrellas.
I have my short-term rental under a Corp is this OK? Yes. In fact, Proper encourages this. Since your short-term rental is a business it's always smart to incorporate. We can write your policy with the named insured as an individual, partnership, LLC, Corp, or Trust.
Why don't all the major insurance carriers offer a policy for short-term rental properties? In order for an insurance company to be profitable it must collect more premium than it pay out in claims. Most insurance companies see short-term rental properties as "high risk". Lots of foot traffic and unknown variables. They simply don't want to take on the risk. With the help of Proper, Lloyd's of London understands the risk and is willing to write it. Note: Lloyds has been underwriting risk for over 325 years.
The Proper Insurance Policy is designed to replace your current dwelling or landlord policy:
- Underwritten by Lloyd’s of London, AM Best’s rated A
- Commercial Package Policy: coverage for building(s), contents, liability, and income
- Building(s): special cause of loss with replacement cost valuation
- Contents: special cause of loss with replacement cost valuation
- Liability: $1,000,000/$2,000,000 in commercial general liability
- Income: actual loss sustained business income coverage with no time limit
- Additional $1,000,000 in personal liability when rental “doubles" as primary residence
- Enhancement coverage for damage to your building(s) caused by a guest
- Enhancement coverage for damage to your contents caused by a guest
- Enhancement coverage for theft and animal/pet liability
- No vacancy or standard occupancy restrictions
- Liability continued over amenities: pools, bicycles, small watercraft, fishing, + more