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Old 08-21-2020, 04:13 PM   #1
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Default insurance for renting "cottages" short term (e.g. AirBnb)

I'm about to close on a property that has a large 4 season home, a small 4 cottage and two 3 season cottages.

I've never really wanted the headaches of being a landlord (fixing plumbing, cleaning, trash, supplying cable TV etc.). We are not sure we even will rent out the cottages, but it's a little silly not too. They are pretty nice and there is 300 ft of beach to go around.

Anyway, a couple hurdles have come up, namely insurance.

We have an umbrella policy (everyone should BTW). We no longer do if we have short term rentals in our name. We could put the property in an LLC or S-Corp, but that would include the house and it would be all commercial rates and don't really want to get into that.

Property has some AirBnb (to fill in gaps) but most of it is word of mouth renters and repeat customers every year.

I'm sure some folks here must rent their primary "lake house" or extra capacity on the lakes.

What do you do for insurance? I'm not as concerned about insuring the cottages themselves as much as I am about the liability.
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Old 08-21-2020, 04:36 PM   #2
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Default Insursance

That is a very good question, and you should be directing it solely to your existing insurance agent. But, before you speak withy your insurance agent, if you plan to go the LLC or S Corp way, get that fully explained to you by your lawyer and tax accountant first. These "waters" are not shallow, and you will be over your head almost as soon as you wade it.
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Old 08-21-2020, 05:15 PM   #3
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Originally Posted by mswlogo View Post
What do you do for insurance? I'm not as concerned about insuring the cottages themselves as much as I am about the liability.
Talk to your carrier or agent. Not all carriers will cover short term rentals, and those that do will need to add the coverage to the policy, for a higher premium. More risk = higher cost.
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Old 08-21-2020, 05:22 PM   #4
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When I looked into something like this it was a commercial insurance policy that was needed.


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Old 08-21-2020, 06:49 PM   #5
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Talk to your carrier or agent. Not all carriers will cover short term rentals, and those that do will need to add the coverage to the policy, for a higher premium. More risk = higher cost.
Well, that's kind of obvious. We did.
They booted our umbrella policy and won't insure anything that is "3 season" or short term rental.

Ending in...Is there anything else we can help you with today?

One other option is long term rentals. Those don't have so many headaches. We have a family member that would rent the house year round for long term. But we know the rules on dealing with family.
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Old 08-21-2020, 07:20 PM   #6
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Well, that's kind of obvious. We did.
They booted our umbrella policy and won't insure anything that is "3 season" or short term rental.

Ending in...Is there anything else we can help you with today?

One other option is long term rentals. Those don't have so many headaches. We have a family member that would rent the house year round for long term. But we know the rules on dealing with family.
Ok... at the risk of this also being obvious: there are carriers out there who will provide policies that cover short term rentals. Ask your agent for a quote from a carrier that offers such policies. I know. I 've been through this. I had to switch carriers. It cost more money. You asked what other people do. I'm telling you what I did. My main concern was also liability.
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Old 08-21-2020, 11:42 PM   #7
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Originally Posted by TMI Guy View Post
Ok... at the risk of this also being obvious: there are carriers out there who will provide policies that cover short term rentals. Ask your agent for a quote from a carrier that offers such policies. I know. I 've been through this. I had to switch carriers. It cost more money. You asked what other people do. I'm telling you what I did. My main concern was also liability.
Did that too. Before checking with a 4th carrier I thought I'd ask here thinking we must be doing something wrong. Going to the wrong people.

Of course I expect it to be more money.

Also even if we can get the insurance on the cottages themselves we are still stuck finding a new umbrella policy.
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Old 08-22-2020, 07:12 AM   #8
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Did that too. Before checking with a 4th carrier I thought I'd ask here thinking we must be doing something wrong. Going to the wrong people.

Of course I expect it to be more money.

Also even if we can get the insurance on the cottages themselves we are still stuck finding a new umbrella policy.
I sent you a PM.

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Old 08-22-2020, 08:42 AM   #9
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Exclamation Doctors Still Advise, "Go Bare"...

There's an ad on the radio TODAY that goes:
Quote:
"ABCXYZ, LLC got me $6 million--which was 6-times what the insurance company offered me."


Without insurance, I've had good luck renting in New Hampshire. My worst experience was my first NH tenant (from MA).

Although they had signed an agreement to list ALL dwellers, they showed up with a "pre-toddler". As we talked on the porch, this unlisted tyke crawled to the edge. (It's a 15-foot drop to the next sundeck). The father "reasoned" with him, "Boris, come back, don't do that".

A family member also had the same rental problem, even with the signed/written stipulation of "no children". Tenants were always "baby-sitting".

"Pacific Heights": Check out what tenant law had done to California law. (which has spread east):
https://www-chicagotribune-com.cdn.a...903-story.html

Florida is full of deadbeats, but I managed about 50% good tenants. One (NY) who TALKED a good game, lived rent-free for
several months, had his parents over for a cookout while I stared at them from my "lesser place" next door. His father apologized by email! His girlfriend could've been under-age.

I learned later from a sheriff's deputy that he used and sold drugs, and pimped-out his girlfriend! It was only upon violent threats (and damage to my property) from other drug dealers that he moved on.

'Next renter paid a year in advance--but that's another salty event. Oh, boy--the tenants' stories I can tell this forum!
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Old 08-22-2020, 09:01 AM   #10
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Quote:
Originally Posted by Red apple View Post
When I looked into something like this it was a commercial insurance policy that was needed.
Exactly. Commercial insurance is not cheap.

Also, hope you are a handyman/woman. As things do break. Some renters will wish money back if the oven/microwave stop working.

Linen/laundry service. Do it yourself or hire a cleaning service.
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Old 08-22-2020, 09:17 AM   #11
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I would put the property in an LLC if you are going to continue in the rental real estate business. Pay the commercial rate, you're going to be making money on it anyway.

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Old 08-22-2020, 10:51 AM   #12
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Any idea what the current owners did with the cottages and insurance?
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Old 08-22-2020, 10:56 AM   #13
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You have stated many times that you really do not want to be a landlord. Also, you have a list so long of all the things that you need and want to do. You mentioned as a possibility that you would tear down the cabins and build a new home for yourself. How about selling off the cabins? You said that you could create another lot so instead of giving yourself more things to do, you would have some extra cash to fix up the main house.
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Old 08-22-2020, 11:10 AM   #14
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You have stated many times that you really do not want to be a landlord. Also, you have a list so long of all the things that you need and want to do. You mentioned as a possibility that you would tear down the cabins and build a new home for yourself. How about selling off the cabins? You said that you could create another lot so instead of giving yourself more things to do, you would have some extra cash to fix up the main house.
Ideally we want to sell off half the property. But it will take time and we donít know if planning boards will allow it. The day of closing will have renters, some into October. So we need to have something (liability insurance) in place as of closing even if itís not long term.

If we canít sell off half we might have to rent for a while to build up some cash. Meanwhile I can do some improvements that donít involve a lot of cash.

A lot of things I donít have control over.
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Old 08-22-2020, 01:34 PM   #15
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I have had rental property for years, both long term and weekly rentals on the lake. I have an umbrella as well as a primary policy and coverage has never been a problem. If your agent can't find you a carrier then I would consult with another agent.

My leases, even for the weekly rentals, state that the tenant assumes all liability for any injury or damage sustained by them or their guests. Obviously that is not bullet proof but it is a good start.

If you manage or maintain the property you will be a defendant in any lawsuit regardless of whether it is in an LLC or any other type of ownership. I don't worry about it, whatever happens, the insurance company will have to defend any lawsuit.
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Old 08-22-2020, 06:59 PM   #16
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Talk to a commercial insurance broker. They should have experience and know which companies will underwrite the liability policy you are looking for.
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