Essential Insurance Types for Your Short-Term Rental in 2025

As a short-term rental (STR) host, your property is more than a home—it’s a business generating income and guest experiences. But here’s a hard truth: if you’re relying on a standard homeowner’s policy, a landlord policy, or even Airbnb’s $1M Host Guarantee, you’re likely underinsured. These policies often exclude coverage for paid guests, leaving you vulnerable to costly damages, lawsuits, or lost income. In 2025, with STR regulations tightening and guest expectations rising, securing the right insurance is non-negotiable. The good news? With specialized STR insurance, you can protect your business affordably and effectively. Here’s a guide to the essential insurance types you need, key questions to ask, and how NSTRA’s Preferred Sponsors can help you find the best coverage.

Why STR-Specific Insurance Is Critical

Unlike traditional rentals, STRs involve frequent guest turnover, increasing risks like property damage, injuries, or legal disputes. A 2024 Insurance Journal report found that 60% of STR hosts with standard homeowner’s policies face claim denials due to exclusions for commercial activity. Paid STR guests aren’t considered “guests” under the law but business clients, requiring business insurance tailored to short-term rentals. Platforms like Airbnb and Vrbo offer some protection (e.g., Airbnb’s AirCover), but these have gaps—coverage is discretionary, requires proof, and may not include liability or lost income. Without proper insurance, a single incident, like a guest injury or fire, could cost you thousands or derail your business. Specialized STR insurance closes these gaps, ensuring peace of mind.

Key Questions to Ask Your Insurance Agent

Before purchasing a policy, verify it covers STR-specific scenarios. Ask your agent to show you the exact policy language addressing these risks:

• What if a guest starts a kitchen fire, damaging the property?

• What if a guest’s child is injured in my pool or at a community facility?

• What if my garage door damages a guest’s car?

• What if a guest trips on uneven flooring and sues for medical costs?

• What if a guest steals appliances or damages furniture?

• What if guest actions lead to HOA fines or neighbor disputes?

• What if damage forces me to cancel bookings, losing income?

• What if a flood destroys my office equipment or STR vehicle?

If your policy doesn’t explicitly cover paid STR guests, it’s inadequate. Work with an agent specializing in STRs, like NSTRA’s Preferred Sponsors, to ensure comprehensive protection.

Essential Insurance Types for STR Hosts

To safeguard your STR, consider these insurance types, tailored to your business needs:

1. Liability Insurance:

   • What It Covers: Protects against guest injuries or deaths on your property, damage to guest belongings, and lawsuits (e.g., a guest slipping in the bathroom). Coverage typically ranges from $1M-$2M.

   • Why You Need It: A single lawsuit could cost tens of thousands. Liability insurance shields your personal and business assets.

   • Cost: $300-$800/year, depending on property size and location.

2. Property Insurance:

   • What It Covers: Repairs or replaces your dwelling, contents (furniture, appliances), and attached structures (cabinets, decks) damaged by guests, vandalism, or covered events. Ensure the policy specifies “short-term rental use.”

   • Why You Need It: Guest damage, like broken TVs or stained carpets, is common. Property insurance prevents out-of-pocket losses.

   • Cost: $500-$1,500/year, based on property value and your location (sorry, Florida STRs).

3. Business Income Insurance:

   • What It Covers: Compensates for lost rental income if your property becomes uninhabitable due to covered damage (e.g., fire, flood requiring repairs).

   • Why You Need It: A 2024 STR market analysis showed hosts lose $2,000-$5,000/month during closures. This insurance maintains cash flow. (THIS policy with Proper Insurance saved us well more than it cost when an Arizona monsoon blew our AC unit off the roof, taking the wiring with it! The repair was intense and we would have lost an entire month's income without it.)

   • Cost: $100-$400/year, depending on revenue.

4. Flood Insurance:

   • What It Covers: Damage from floods, which standard policies exclude. Essential in high-risk areas (check FEMA flood maps).

   • Why You Need It: Floods can destroy electronics, furniture, and office equipment, halting operations.

   • Cost: $400-$1,200/year, based on location and coverage.

5. Umbrella or Blanket Policy:

   • What It Covers: Extends liability and property coverage beyond standard policy limits or fills gaps (e.g., unique STR risks like HOA fines).

   • Why You Need It: Provides extra protection for high-value properties or complex operations (e.g., hosting events).

   • Cost: $200-$500/year for $1M additional coverage.

6. Disability Insurance (Optional):

   • What It Covers: Replaces income if you’re injured and unable to manage your STR, critical for solo hosts.

   • Why You Need It: Ensures financial stability during recovery, protecting your business.

   • Cost: $300-$600/year, based on income. 

Choosing the Right Policy

Before selecting coverage, evaluate:

• Your Needs: List assets (e.g., $50,000 in furniture, $300,000 property) and risks (e.g., pool, coastal location).

• Deductibles: Choose a deductible you can afford ($250-$1,000) to balance premiums and out-of-pocket costs.

• Exclusions: Confirm what’s not covered (e.g., intentional damage, wear-and-tear).

• Cost: Compare quotes from STR specialists to find affordable options.

For quick coverage, consider providers like Property Protect, offering $10,000 in guest damage protection for $5/night with a $250 deductible. For comprehensive policies, NSTRA’s Preferred Sponsors, like Proper Insurance and CBIZ, specialize in STRs, backed by reputable underwriters like Lloyd’s of London. Contact Proper at (888) 631-6680 or CBIZ at (800) 615-5898 for free quotes and coverage comparisons.

Visit  nationalshorttermrentalassociation.com/insurance to explore these member-exclusive options.

Additional Considerations

If your STR hosts events (e.g., weddings) or includes businesses like a gift shop, secure separate event or commercial policies. Write out all possible scenarios—guest injuries, neighbor disputes, equipment theft—and work with your agent to address each. For complex operations, an umbrella policy ensures no gaps. Always review policy verbiage to confirm “short-term rental guests” are covered, as vague language can lead to claim denials.

Final Thoughts

Protecting your STR starts with the right insurance—liability, property, business income, and more, tailored to your unique risks. Don’t rely on homeowners’ policies or platform guarantees; invest in STR-specific coverage to safeguard your business. Start today: list your coverage needs, contact an NSTRA Preferred Sponsor like Proper or CBIZ, and secure a policy that lets you host with confidence. Sign in at  nationalshorttermrentalassociation.com to access vendor discounts and elevate your STR’s protection in 2025.

Go and grow!