That Dirty Word …. Insurance


Be sure to read the fine print!

Liability Insurance … I can actually hear the brakes squeal when I approach this subject with a new clients. It’s that dirty “I” word. We pay and pay and pay, and hope we never have to use it. Good liability insurance is essential to all vacation rental properties. Maybe you’ll never need it, but if you do …. thank goodness it’s there. I recently had a colleague email me the way she explains liability insurance to her new clients. It is so important for owners to get the correct insurance. Let’s compare it to buying motorcycle insurance. Say your agent typically sells auto insurance and has no experience with motorcycle. You purchase an auto policy and pay on it month after month. But when you have a motorcycle accident, that auto insurance policy is not going to do you any good and you have no coverage on your motorcycle accident. Same with property insurance … on landlord, homeowner and umbrella policies, look at the fine print … you may find that there is an exclusion of coverage for homes rented for less than 30 days. Paying for insurance without adequate coverage will cost a whole lot more than $300-$400 in the long run … or a lawsuit.

Many vacation home owners who think they have adequate liability coverage do not. I know this because almost 100% of the owners that come to me from other vacation rental companies do not even have basic coverage. They may say they have an umbrella policy from AAA! Nope … the last time I checked, AAA does not sell vacation rental insurance … which was last week. The same goes for many of the major insurance companies. In fact I had an owner/client tell me recently that another local vacation rental company told her she did not need any liability insurance, they would cover it! I’m not sure how that works since the company clearly has no “insurable interest” in her property. Some folks in this industry are uninformed and some fly on “a wing and a prayer.” They want your business. But the old rule applies … if it’s too good to be true it probably isn’t true. Unfortunately you will suffer the consequences if there is an accident in your property and it probably won’t matter what your management company told you.

For those of you that have a vacation rental property, here’s a few questions …

  • If you enlist the assistance of a real estate agent in renting your property …. has your real estate agent discussed liability insurance with you or explained your possible exposure if an accident occurs during a tenant’s stay at your property?
  • If you manage your own vacation rental, did the listing site require you to show proof of liability insurance or advise you on the coverage you should have on your property?
  • If your property is listed with a vacation rental company, have you thoroughly read through your management contract regarding liability insurance requirements? Have you received information and guidance from your vacation rental manager?
  • If you already have liability insurance in place … have you read the fine print? Is there anywhere in the policy that states that this is a home owner’s insurance and not a business insurance? (and remember, once you take money from a vacation rental tenant … your home is considered a business)

I have been in the vacation rental industry for over eighteen years and I have noticed that in the past even some of the major insurers sold coverage pretty much like the motorcycle example above. It has been increasingly difficult to find the proper vacation rental coverage and costs have increased significantly over the years. I shudder to think of the number of properties that I have management in the past with only umbrella policies … they were standard back in the day. Thankfully, in all those years we never had to test those policies. Not one of the multiple-thousands of guests I worked with, have brought suit against an owner. So … you may be asking why not play the odds? What are the chances of being sued? Well, Murphy’s Law would say something to the effect of; as soon as you decide not to purchase liability insurance … you will be sued. Picture this: your tenant slips on a loose tile in the bathroom and breaks a hip. Can you afford to pay for their hip replacement? What if they end up in a wheelchair for the rest of their life? Can you afford $1M plus in medical and lifelong care? It probably won’t happen … but if it does? If I owned a vacation rental home I know it would definitely take me down. I’m not a lucky gambler.

Facts you should know:

  • Short-term vacation rentals are considered businesses in the eyes of the insurance world. When you collect money to allow someone to stay at your home for a short period of time it is a business transaction. Your rental is no different than a coffee shop or grocery store, it’s a business.
  • A homeowner’s policy does not cover business activities. It specifically excludes business activities. In other words, it will not respond to any claim involving running a business from your home. A recent real life example occurred when a renter backed up a truck and stole everything from the vacation rental and a very reputable homeowner’s insurance company denied the claim since it involved a renter. (this occurred on the East Coast, not locally)
  • A homeowner’s policy and most dwelling/landlord policies carry personal liability coverage. Personal liability coverage will not respond to business activities. For example, a paying guest slips in the shower and elects to sue you for their hospital bills. For this event, you need a commercial liability policy (business liability).
  • A personal umbrella policy does not cover/protect a business. A personal umbrella will not follow business activities. A personal umbrella is only for personal negligence such as running a stop sign and hitting another car.

So what liability coverage is recommended on a vacation rental property? The standard is $1M/$2M (per-occurrence/aggregate) commercial liability coverage in the event of a guest’s injury or death and $1M/$2M (per-occurrence/aggregate) commercial liability coverage extended to your amenities.

Where do you get the insurance? You can try your insurance company or call an insurance broker for quotes. But again … make sure you explain that you will be doing “vacation rentals” … and remember to check the fine print. If you decide to do monthly rentals only and the policy states that they will cover tenants renting for over 30 days … make sure your rental agreement is for over 30 days. February is tricky; 28 nights … 29 in a leap-year. There are also recommended liability policies specific to vacation rentals over 30 days.

Vacation Rentals of the Desert is a member of the Vacation Rental Manager’s Association (VRMA). Recently an insurance company, CBIZ, joined as a vendor associate. CBIZ offers insurance coverage specifically for vacation rental properties and they know the industry well. After many high recommendations from colleagues and reviewing their materials, we have started referring CBIZ to our homeowners who are struggling to find coverage and I am now sharing it with you.

Believe it or not … this post is not an advertisement for CBIZ. I am just so pleased to find an insurance company that knows the industry, has agents that know the correct questions to ask owners and offers a policy that gives the unique coverage needed for a vacation rental property. I understand the struggle to find good, affordable coverage and I’m hopeful that CBIZ will make my “insurance conversations” a bit easier. I have already heard back from one of my owners who not only contacted, but fully insured her vacation home through CBIZ. She was delighted with the coverage and said that after speaking to several insurers, felt she had saved hundreds of dollars with CBIZ.

The CBIZ program is a first-of-its-kind insurance coverage, tailor-made to short-term Vacation Rentals like yours:

 Replacement cost coverage for your building(s) and your contents including theft
 Coverage for damage to your building and contents caused by a guest
 Actual loss of income coverage with no time limit
 $1M/$2M commercial liability coverage in the event of a guest’s injury or death
 $1M/$2M commercial liability coverage extended to your amenities
 Underwritten by Tudor Insurance, AM Best rated A+

Get a quote at

Or you can call (888) 883-5696 to speak with an agent.


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Don’t be the Victim of a Scam!

shutterstock_158058749This week we received a call from a gentleman asking for our advice.  He explained that he had rented a property through one of the vacation rental “by owner” sites and was now afraid that he had been scammed.  He apparently spoke to the person who claimed to be the owner of the vacation rental who urged him to express mail a cashier’s check in the amount of $5,000 to secure the rental.  Now just weeks from his arrival date, all contact with the alleged property owner has ceased.  The phone number and email address that he used initially were no longer in service and unfortunately he had mailed the check to a post office box.

We advised this very unhappy gentleman to call the listing site’s support team for assistance, and we gave him the phone number.  We also suggested that he contact his bank to see if they could assist in recouping the money.

The sad fact is … this kind of thing happens all the time.  We typically get four or five of these calls every season.  Many of the scam victims will look for alternate accommodations, but for some, as in this case, their vacation money has been paid to the scammer and they are now forced to cancel their plans.   There are bad folks out there and over the phone they might sound like your very best friend.  Crooks often have great personalities … that’s what makes them successful.

There are many red flags you can watch for … the above scenario was full of them.    Not accepting credit cards or personal checks are big red flags.  Use of a post office box is another, and is pretty common with scammers.

Even though the vast majority of by owner listings are totally legitimate with honest, trustworthy owners … there are always going to be the few … just out to scam a buck from the unsuspecting.  I do not think the typical renter knows that by owner sites have no way of verifying that their clients actually own the property that they list.   Owners are not interviewed or required to show any proof of ownership, deeds or legal documentation.   It is an extremely easy process to list a property, upload pictures, and start taking reservations, once the alleged owner pays the annual listing fee … they’re in business.   It really is that easy!

The worst case I’ve seen was a few years ago when I received a call from a repeat guest.  She explained that she had won the lottery … Literally!  Won the lottery!   She and her husband decided to really do it up big at season and they went on line and found a crazy expensive, over-the-top, multi-million dollar property at one of the most exclusive communities in our area.  Two weeks before their arrival, after paying $40,000 plus, the phone number and email address of the “owner” was no longer working.  After contacting an attorney in the desert, property deeds were researched and they found that the house was not owned by the person who had listed the property as a vacation rental.  The legal owners were contacted and they had no knowledge of the person who had listed the property and had never offered the home as a vacation rental.  Apparently old photos from the original sales listing of the house were found on the internet, copied and used in the vacation rental ad.

This past May, I was in charge of putting together a girlfriend weekend.  Even with my experience in spotting a scammer, I was not about to gamble with my friend’s portion of the vacation money.  Luckily our company manages a property for a client who also has a vacation cabin in Lake Arrowhead.  If I did not have this contact I would have turned to a reputable vacation rental company.  I’m good at spotting a scam … but I’m not much of a gambler.

My advice … when spending your hard earned money … stick to the professionals.  If you don’t know who to use call the Chamber of Commerce or Visitor’s Bureau in the area your are visiting and ask for a list of reputable vacation rental companies.

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Palm Springs Back in the Day

Today I’d like to share a wonderful YouTube video that takes us back to the days where movie stars and celebrities lit the streets of Palm Springs. Glamorous parties, weekend trysts and Hollywood gossip columnists abound.  Really, not much has changed … not if you look hard enough.  Sit back and enjoy … and have a great week.

Video:  Lauralee Davis

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Funniest Vacation Rental Story Ever!

Happy-New-Year-Pictures-4The following is my very favorite “funny” vacation rental story.  You will also find this story buried in the “About Me” section of this blog.  Since the “About Me” section is easy to miss … I thought I’d kick the New Year off with a laugh! 

I was jolted out of a dead-sleep by the William Tell Overture.  What I thought was a clever ring tone for my “emergency” cell phone lost its humor at 1 a.m. in the morning.  In response to my groggy “hello” was a very agitated security guard telling me that one of my tenants had locked herself out of her vacation home …. without any clothes on!  Quickly dressing, I grabbed my ring of emergency keys and dashed out not knowing what to expect.  The plan was to pick up my tenant at the guard house of the country club where she was staying and deliver her and a set of keys back to her vacation home.  I braced myself for what I anticipated would be a very embarrassed and very upset guest.  As I approached, from the guard house emerged a tall and extremely beautiful woman, head up, shoulders back proudly wrapped in a mattress pad just as a queen wears a royal cape.  I will call her Sue.  Waving her thanks to the two security guards, Sue jumped into the passenger seat of my car before I had a chance to pull over and, thank goodness, she was laughing!  She explained, “I shopped all day at the Cabazon Outlet stores and returned to the condo tired, hot and thirsty.  I pulled into the garage and immediately went inside, closed the blinds, stripped out of my clothes, poured a glass of wine and sat down to cool off and watch the late night news.  Before going to bed I decided to unload the car.  I propped open the door between the condo and garage with the fire extinguisher and made several trips between the condo and my car.  I was retrieving my last bag out of the trunk, the mattress cover, when I heard the fire extinguisher slide across the floor and the door slam shut.  The door was locked … keys in my purse … inside the condo!”  This poor woman sat in the garage, wrapped in the mattress cover, lights off and garage door wide open for two hours until she saw the security guard in the patrol car making his rounds.  She ran out and flagged him down!  As we got out of my car Sue parted her Bed, Bath and Beyond cape and showed me that she was indeed wearing undergarments which looked very much like she had dressed to go swimming.  Sue explained that “this is one of the funniest things that has ever happened to me.  My husband made a trip back home for a meeting but will return in a couple of days.  Please don’t mention this to him … he would be so embarrassed.”  Sue and her husband returned several times after that and Sue and I always had a bit of a laugh about her “exciting” shopping episode.  As far as I know, Sue never told her husband.  Post Note:  I changed my emergency ring tone the next morning.

One fact I have learned through my eighteen years in this crazy vacation rental business, you never know what will happen next.   No two days, no two properties, owners or guests are ever the same.  From lost keys to leaking toilets to mysteriously blinking lights to broken air conditioners in the middle of the night at temperatures over 110 degree, during our rental season there is never a dull moment.  One thing remains constant, everything is an emergency to the person reporting the problem and it is our responsibility as vacation rental professionals to rectify these problems as quickly as possible … no matter how insignificant they may seem.  And so, as crazy as it might sound … I love this business, despite the daily challenges, conflicts in personalities, things that make you say hummmm, things that keep you awake at night and things that make you laugh so hard you almost wet your pants.  So as any proud mother might say … I love my baby … even if it does drive me crazy sometimes.

Happy 2015 everyone!

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