Homeowners who rent out their properties on platforms like Airbnb or Vrbo may face big problems with their insurance coverage. A new report from the Insurance Information Institute (Triple-I) warns that standard homeowners insurance often doesn’t cover the risks tied to short-term rentals. This leaves owners vulnerable if something goes wrong.
The short-term rental market in the U.S. has grown quickly. In 2024, it was worth nearly $69 billion and is expected to keep growing by more than 7% a year. According to data cited by a Congressional Research Service report, there were about 2.4 million rental properties across the country in 2023, generating $64 billion in revenue.
Sean Kevelighan, CEO of Triple-I, said many property owners don’t realize how renting out their home changes their insurance risks. With more guests coming and going, there’s a higher chance of damage or accidents — risks that many basic policies don’t cover.
If owners don’t tell their insurance company they’re using the property as a short-term rental, they risk having claims denied or facing reduced coverage. In some cases, their policy could even be canceled or premiums increased. Research shows that policy exclusions are a leading cause of denied insurance claims, making up about a third of rejections. Plus, nearly 9% of denied claims relate to misrepresentation, which can include hiding rental activity.
The report also highlights that insurers might see these rentals as higher risk, leading to higher premiums. For those living in multi-unit buildings, one neighbor’s rental can affect the whole building’s master insurance policy, causing higher costs or changes for everyone.
Local rules add extra hoops to jump through. Property owners must follow zoning laws, get the right permits, and obey rental rules; otherwise, their insurance might not protect them in case of trouble.
Triple-I recommends homeowners speak with their insurance agents before listing a property. They should carefully review their current coverage and think about buying insurance made specifically for short-term rentals to cover any gaps.
As short-term rentals continue to grow, being upfront and prepared with the right insurance can help protect both owners and guests from unexpected problems.