Umbrella Insurance: Are Your Rental Properties REALLY Protected? (2023)

Are Your Short-Term Rentals REALLY Covered? The Truth About Personal Umbrella Insurance! (2023) #shorttermrentals #insurance #assetprotection

Free Guides:

Do You Need An Umbrella Policy for your rental properties?

You should have a personal umbrella policy AND a commercial umbrella policy. Let's examine why:

Personal umbrella policy – protects you from lawsuits brought against you individually for your negligence. For example, a personal umbrella policy is ideal to protect you from a car accident claim or a claim against you for a premises liability lawsuit at your homestead. However, most personal umbrella policies will not provide you protection for your short-term rentals or any other type of rental real estate.

Commercial umbrella policy – protects your businesses and short-term rentals by providing your business coverage if a liability event occurs on your property. This is critical to obtain if you are actively renting properties you own. Otherwise, you will not receive protection in the event of a lawsuit.

An Umbrella Policy extends your coverage limits in the event your primary short-term rental insurance is exhausted. It is Always a good idea to add a commercial umbrella insurance policy as your portfolio grows.

BEWARE! – NEVER assume a personal umbrella policy will automatically extend to your rental property. This is not always the case. Why?

Your underlying insurance policy limit must be fully exhausted before the umbrella policy kicks in and if you do not have the correct underlying short-term rental insurance, the claim may never get to the umbrella.

If a claim did exhaust your underlying insurance policy, all personal umbrella policies have a “business activity” exclusion, meaning they will not respond to any claim involving a business. Personal umbrella carriers consider “regularly” short-term renting a property for financial compensation as a business. Your short-term rental will always be considered a business.

How Do I Find A Commercial Umbrella Insurance Policy?

Start with your current insurance provider and ask specifically for a “business” policy to cover your rental property.

Many insurance agents will filter you to a personal umbrella policy salesperson. It is critical to specify that you must see the language of the policy covering your STR investments from premises liability/ & personal injury protection.

00:00 Umbrella Insurance: Are Your Rental Properties REALLY Protected?
01:43 – Personal Umbrella Policy
01:45 – Commercial Umbrella Policy
02:57 – Business Activity Exclusions!
03:59 – What About A Bottom-Up Attack?
04:32 – Commercial Insurance Is Key!
05:04 – Increase Your Underlying Insurance Coverage For Protection!
06:30 – How Do You Find Commercial Umbrella Coverage?