Help! Short term rental policy

[jcm55]

I've got a high-end short term rental property (AirBnB / VRBO) on the Nevada side of Lake Tahoe. 7-bed / 4000 sqft. Looking for help insuring it properly.

It was previously our primary residence. At the moment it still has a standard homeowners policy with a "home sharing" endorsement. But we converted it to an investment property a year ago, and we're pretty far out of bounds for that policy now. I.e. we've got no legit case that it's a primary (or even secondary) residence, way more rental days than the endorsement allows, etc. If something happens, I think we're at risk of having a claim denied based on the property's current use. And that policy definitely doesn't cover loss of rents on a property that grosses $300K+ / year.

I've talked to all the folks I can find who specialize in short-term rentals, or at least are known to accept them. Proper and Steadily both declined due to wildfire risk, though Proper would write a liability-only monoline. AMIG would take it, but they don't write policies above $1M. Etc, etc. A couple independent agents shopped E&S markets with both Amwins and Burns & Wilcox, who came back with nothing.

Commercial E&S options? I dunno. Local agents insist insurers won't write those for a SFH.

Help!

 

[jcm55]

A couple other details in case they're relevant. We live locally, I self-manage the property am in the process of getting my Nevada property manager license. The property is currently titled in our family trust. I could explore putting it in an LLC if that opens up commercial insurance options, but might create complications with the mortgage and short-term rental permit.

 

[adjusterjack]

way more rental days than the endorsement allows, etc. If something happens, I think we're at risk of having a claim denied based on the property's current use.

Especially if you are concealing the current use from your insurance company.

Proper would write a liability-only monoline. AMIG would take it, but they don't write policies above $1M.

Take the monoline liability and write the AMIG for $1,000,000 at ACV instead of Replacement Cost or the AMIG package. Understanding that you self-insure any loss over $1,000,000.

Do that for a year and maybe things will ease up in a year and you'll may do better on the next anniversary.

I suggest you do something quickly because your current policy is at risk of claim denial (which means you potentially self-insure a total loss) and policy rescission back to your last renewal (which means your lender puts it's own insurance on the property, retroactively, to cover the loan balance and charges you outrageous rates for it.)

Not a good situation to be in.

 

[marindependent]

Proper would write a liability-only monoline.

Will "Proper" do the liability and your State Insurer of Last resort do at least some of property coverage?

I assume when you say

AMIG would take it, but they don't write policies above $1M

that you mean they will not take it at all, period - as opposed to they will only write it up to $1MM.

Did your agents that checked out BW and Amwins indicate that the Commercial market might be better?

 

[jcm55]

Will "Proper" do the liability and your State Insurer of Last resort do at least some of property coverage?

Proper will do the liability, but Nevada doesn't have a FAIR plan or other insurer of last resort.

I assume when you say

that you mean they will not take it at all, period - as opposed to they will only write it up to $1MM.

Did your agents that checked out BW and Amwins indicate that the Commercial market might be better?

The agent I spoke with said that the property met AMIG's criteria. But we didn't proceed to an actual quote because of the $1M max. This is a $3.5M property with probably a $2M+ rebuild cost. $1M doesn't even cover the mortgage.

Retail agents keep telling me that no one will write a commercial policy for a SFH unless it's owned by an LLC or other corporate entity. I know that's not strictly true though. If it met their criteria, Proper and Steadily would both write a commercial policy for my short-term rental and have no problem with individual or trust ownership.

I'd love to connect with an agent who's willing to give it go shopping this in the commercial E&S market.

 

[RickyG]

Especially if you are concealing the current use from your insurance company.


Take the monoline liability and write the AMIG for $1,000,000 at ACV instead of Replacement Cost or the AMIG package. Understanding that you self-insure any loss over $1,000,000.

Is that even possible? AMIG will allow you to write less than the RCE shows as the rebuild?

 

[jcm55]

I got a tip in another forum that State Farm will write a commercial policy for short-term rentals, and looks like they are okay with the wildfire risk and value. Not sure why my local State Farm agent didn't come up with this option when we spoke a few months ago. But looks like I am good to go.

 

[Al3x Lee]

Have you tried Prime Insurance? They write some oddball stuff

 

[Allen Trent]

I got a tip in another forum that State Farm will write a commercial policy for short-term rentals, and looks like they are okay with the wildfire risk and value. Not sure why my local State Farm agent didn't come up with this option when we spoke a few months ago. But looks like I am good to go.

do you have all your policies with that other local state farm agent? if not, just like most independents, they dont want only your hard to place coverage. they likely offer up the unicorn offerings to existing clients with many policies, long term clients or new client that brings everything else with it.

 

[jcm55]

do you have all your policies with that other local state farm agent? if not, just like most independents, they dont want only your hard to place coverage. they likely offer up the unicorn offerings to existing clients with many policies, long term clients or new client that brings everything else with it.

I offered the first State Farm agent the whole shebang -- home, auto, boat, short-term rental property, umbrella. He couldn't write the home policy because it's in California, and had nothing to offer on the STR.

There's nothing unicorn about the policy I eventually got. It's a standard business owner's policy with replacement cost coverage for the building, $1M/$2M commercial liability and loss of income. I think the first agent genuinely had no clue that State Farm would write this kind of policy for a SFH rental. Second agent has done a bunch of them.