Anything can happen in a holiday home. And sometimes, everything is doing to happen.
The rental nightmares range from minor annoyances, such as ant infestations, to major annoyances, such as flooding. As a consumer advocate, I’ve seen it all.
Ants were my unwanted roommates in an apartment in Athens this summer. No sooner had I put a slab of baklava on a plate than they surrounded it, ready to take it away. And by “remove it,” I mean like those giant red ants in… Indiana Jones and the Kingdom of the Crystal Skull. There was no escaping it – until the vacation rental manager sent an exterminator.
I’ll never forget the Pennsylvania cabin that nearly washed away in a flood a few summers ago. After a flash flood I thought my car would drift over the nearby river. Luckily not.
Whenever I think of these disasters, I wonder: Would travel insurance have made any difference?
Sometimes the answer is yes. And it turns out travelers are thinking the same lately.
“As domestic travel increases, we’ve seen increasing demand from travelers seeking standalone vacation rental damage coverage,” said Katie Crowe, a spokeswoman for travel insurance company battleface.
But is insurance even necessary for a vacation rental? What does it cover and how is it comparable to – and different from – regular travel insurance?
Yes, you probably need insurance for your holiday home
If you’re staying in a vacation rental, travel insurance is a must, says Christina Tunnah, the global general manager of World Nomads Group. After all, you probably live in a house worth hundreds of thousands of dollars.
“Travelers need to be 100% sure of the liability they have if they damage a home,” she says. “What happens if they accidentally bump your car against a fence? Does the homeowner’s home insurance policy cover them for that?”
The answer is: not always. Fortunately, some individual travel insurance policies have liability coverage. That’s worth considering if you’re renting a vacation home, she says.
But that’s not the only reason to consider insurance. Angela Borden, product marketing strategist at Seven Corners, says most travelers who rent a vacation home or condo are concerned about protecting the money they spend on rent and airfare.
“These expenses typically represent the bulk of the cost of a vacation for this travel scenario,” she says. “As a result, travelers should carefully review the travel insurance plan document, focusing on the covered reasons for the trip cancellation.”
Two types of insurance for your holiday home
“It’s important to distinguish between two types of vacation rental insurance,” said Stan Sandberg, co-founder of the travel insurance site TravelInsurance.com.
Travel Cancellation Cover
Travel insurance with travel cancellation coverage can protect those costs if a policyholder has to cancel for a covered reason, such as unexpected illness, including for COVID, or hurricanes,” says Sandberg.
Rental damage cover
If something happens to your rental property while you’re in it — say, you spill red wine on the white shag rug — damage coverage can help cover the cost. Please note that intentional damage, such as a raucous feast, is not covered.
Both are becoming increasingly popular, Sandberg says. “We’ve seen a significant increase in travel insurance purchases for prepaid and non-refundable vacation rentals,” he says.
How does travel insurance cover holiday rentals?
Most vacation rental coverage is included in broader travel insurance. Here are some of the types of coverage you can get:
- Protection against accidents while renting a home, such as spilling wine on a carpet, breaking a lamp or window, or damage caused by your pet.
- Travel cancellation benefits, which cover an unplanned hotel stay if your flight or train is delayed or cancelled.
- Emergency medical costs and evacuation costs. This is especially important for international travel, where your health insurance may not be valid.
Travel insurance can also cover items that get lost at a vacation rental, says Joe Cronin, president of International Citizens Insurance.
“You can also make a claim on your homeowner’s insurance or rent, but filing a claim can increase your premium,” he says. “That’s why your travel insurance is your first line of defense.”
I have details on finding insurance coverage — and avoiding a vacation rental nightmare — in my comprehensive vacation rental guide.
What does travel insurance not cover for holiday rentals?
Unfortunately, travel insurance does not cover everything. Here’s a list of items your insurance won’t cover:
- If you’re not sure whether you want to stay in a rental property (unless you have a more expensive “cancel for any reason” policy).
- Any financial scams related to vacation rentals, such as transferring money or having your personal information stolen by phishing.
- Damage caused intentionally, usually as a result of a party.
- Disputes with a host or platform over missing amenities leading to missing nights. Travel insurance usually won’t cover a hotel if you check out early.
This is only a partial list of items not covered by travel insurance. Remember that travel insurance lists the perils you are covered for. If it is not specifically mentioned, there is no coverage for it.
What is the most common insurance claim?
Of all the coverage you can get with your travel insurance, perhaps the most important is for travel cancellation.
“Travel cancellation is generally still the number one type of claim for any type of vacation — including vacation rentals,” said Carol Mueller, a vice president at Berkshire Hathaway Travel Protection. “In addition to standard travel cancellation coverage, vacationers are also interested in making sure the plans they purchase include a security deposit should unexpected property damage occur.”
One of the best-kept secrets of travel insurance is that it covers potentially non-refundable costs if a destination becomes uninhabitable, said Daniel Durazo, director of external communications at Allianz Partners USA.
“If a vacation rental is located where a natural disaster has occurred, it can become uninhabitable due to power or water outages,” he says. “Be sure to document the issues and then file a claim with your travel insurance company for your non-refundable expenses, which may include the cost of the rental and travel expenses.”
Travel insurance covers more than holiday rentals
Most travel insurance policies are not specifically designed for vacation rental guests. But they cover dangers that can strike a guest.
Suppose you have a holiday home by the sea and close the beach. Your travel insurance may cover that.
“Some travel insurance plans have travel inconvenience benefits that can pay up to a certain maximum benefit amount for situations such as a beach closure if the beach at the traveler’s destination is closed by the government for 24 hours or more,” explains Sherry Sutton, vice president of marketing and communication at Travel Insured International.
Sometimes you can add vacation rental property insurance to your travel insurance. Travel insurance startup Faye, for example, has a vacation rental option on all of its basic plans. It covers accidental damage to your rental car, such as spilled wine, broken plates and broken appliances. All its policies also cover rental housing exclusions
“That means if your vacation rental keys are lost, stolen, or damaged and you’re not allowed to access the property for three hours or more, you could be charged up to $200 in compensation,” said Doron Samish, Faye’s vice president of product. at Faye.
Who needs insurance for their holiday home?
I spoke to several travelers who had taken out travel insurance for their vacation rental. They said that while they were concerned about a vacation rental nightmare, they were equally interested in other coverages that insurance offers.
For example, Colleen Carswell, a security specialist from Bel Air, Maryland, just purchased a policy through Allianz Travel Insurance for a beach rental. The policy covers the usual perils such as lost luggage and travel interruption.
“What we personally found most beneficial about travel insurance is the medical coverage,” she told me. “A few years ago we went on vacation when my husband had to go to the emergency room. And another time my one-year-old had to go to the emergency room. Both times we were outside our health insurance network.”
The Allianz policy covered them.
Buying advice for holiday insurance: read carefully
One final note: you’ll want to read your policy carefully before buying.
“The best advice here is to review the plan’s benefits before you buy,” said Brian Rock, national director at VacationGuard.com. “Some plans require all people to be named. Other plans automatically extend protections for companions.”
That’s true. I’ve seen far too many “gotchas” during the claims process where someone forgot to name everyone on the policy or overlooked some other seemingly insignificant detail. Because trust me, if you ever need to make a claim on your vacation rental, your travel insurance won’t overlook it each detail.