Thinking about renting out your home or investment property on Airbnb or Vrbo? Great idea — short-term rentals can bring in serious income.
But before you hand over the keys, there are two big insurance traps that could cost you thousands if you’re not careful.

Let’s break them down in simple terms.

Trap #1: Standard Homeowners Insurance Might Not Cover You

Here’s a common mistake.
You live in your home, travel for a few weeks, and decide to rent your place on Airbnb. Easy money, right?
Not so fast.

Your standard homeowners insurance is made for personal use — not business use.
When you rent out your home, even for short stays, you’re technically running a small business. And many policies exclude coverage for business activities.

That means if a guest slips, breaks a leg, or damages your property, your insurance company might say,

“Sorry, this claim isn’t covered.”

Why AirCover Isn’t Enough

Airbnb and Vrbo advertise “$1 million host protection” under programs like AirCover.
Sounds great, but here’s the catch — that coverage has limitations.
It’s secondary coverage, not your main policy. And it often doesn’t protect you against all losses, especially property damage or long-term liability.

Think of it as a bonus, not a safety net.
You can watch a full breakdown in this YouTube video where a mortgage expert explains these traps in detail.

What You Should Do Instead

Before you host, call your insurance agent.
Ask them these two key questions:

1. “Do I need a home-sharing endorsement on my policy?”

2. “Should I switch to a landlord policy for short-term rentals?”

A home share endorsement adds coverage for guests and short stays.
If you rent more often or own multiple properties, a landlord policy or short-term rental policy might make more sense.

And here’s a bonus tip — if your property sits vacant while you travel, ask about a vacancy endorsement.
Some insurers deny claims if your home is empty too long.

If you’re not sure how to structure your property or finance your rental the right way, check out this guide on Airbnb mortgages and how to finance them.

Trap #2: Umbrella Policies and LLCs Don’t Always Mix

Now, let’s talk about something most hosts overlook — liability protection.

Many smart investors use LLCs (limited liability companies) to protect their personal assets.
Others buy umbrella insurance to add extra coverage on top of home or auto policies.

But here’s the catch:
If your rental property is owned by an LLC, and your umbrella policy only lists you personally, the LLC might not be covered at all.

That means if a guest sues your rental business, your umbrella policy could say,

“Not our problem — wrong name on the policy.”

The Fix

Call your insurance agent and confirm:

• Your landlord policy is in the LLC’s name

• Your umbrella policy also lists the LLC or includes it in the schedule

If not, you could look into a commercial umbrella policy, but be warned — those can be pricey.

Still, having the right setup protects you from devastating coverage gaps that can sink your rental business.

If you plan to scale your hosting or buy more properties this year, explore short-term rental financing options for 2025 to help you grow the right way.

Bonus Tip: Check the Age of Your Roof

Here’s something that catches a lot of homeowners off guard — roof exclusions.

Many insurers quietly switch your roof coverage from “replacement cost” to “actual cash value” once it’s 15 years old.
That means if a storm hits, you could get only a fraction of what it costs to replace your roof.

In one recent case, a client’s insurer changed the terms without much notice.
Their payout would’ve been thousands less if damage occurred.

What You Should Do

• Check your roof age and coverage type.

• Ask your agent if your roof is still covered for full replacement cost.

• Review your policy each year for new exclusions or changes.

Don’t assume you’re covered — always ask the right questions.

Why This Matters Now

Short-term rentals are booming.
According to AirDNA, U.S. hosts earned over $63 billion in 2023, with average nightly rates hitting $265.
That’s a huge opportunity — but also a bigger risk.

Insurance companies are tightening rules, adding exclusions, and raising premiums.
If you don’t review your policy, you could lose protection right when you need it most.

Action Steps to Protect Yourself

1. Review your homeowners policy — confirm it covers short-term rental activity.

2. Ask about a home-share endorsement if you rent occasionally.

3. Switch to a landlord or short-term rental policy if you host often.

4. Double-check your LLC and umbrella coverage — names must match.

5. Inspect your roof coverage — old roofs can limit payouts.

6. Get everything in writing from your agent.

Don’t wait for a disaster to find out your insurance doesn’t cover you.
A quick 10-minute call to your agent could save you thousands — and give you peace of mind.

Hosting your property can be an incredible wealth-building tool.
Just make sure your insurance keeps up with your goals.

If you want a free insurance checklist, drop a comment on the YouTube video here.
It’s a quick guide to help you protect your property the right way.