digest
Short Summary
Main recommendation: Choose your insurance deductible based on an amount you can pay out of pocket at any time, and do not assume the premium savings from a high deductible are worth it without understanding how the claim payout works. The speaker also says rental owners should buy contents (personal property) coverage separately from dwelling coverage, since dwelling coverage alone does not protect items inside the property. He further argues that short-term rental coverage is often only slightly more expensive than traditional coverage, and that add-on coverages are usually worth their modest cost.
Key Points
- A higher deductible lowers your premium, but you still must cover the deductible yourself in the claim process, so the savings come with a real cash-on-hand requirement.
- The speaker's $35,000 claim after a flat-roof water leak showed that the insurer withheld his $10,000 deductible from the payout, leaving him a $25,000 check, and he had a hard time finding a contractor willing to do the repair for that amount.
- Dwelling coverage protects the structure only; stolen or damaged furnishings require separate contents coverage, which the speaker lacked when about $10,000 of items were stolen from his short-term rental.
- Short-term rental insurance is not necessarily much more expensive than traditional landlord coverage; the speaker says the rep told him the difference might be around 75 cents on the dollar, with annual premiums ranging roughly $200 to $600.
- Premiums are driven more by the property's location risks (fire, flood, hurricane zones, or seasonal weather) than by whether the home is rented short-term.
Details Worth Noting
-
Concrete instructions:
- Before choosing a deductible, ask your insurance rep exactly how the deductible affects your premium and claim payout.
- Pick a deductible amount that you have in the bank at all times so you can cover it if a claim happens.
- Confirm with the insurer whether the deductible is withheld from the payout, and budget for the reduced check you will actually receive.
- If you run a short-term or medium-term rental, ask specifically for additional coverage for the items inside the home (contents or personal property), not just dwelling coverage.
- Get quotes for short-term rental coverage and compare them with traditional long-term coverage before assuming the cost difference is large, as one rep told him the difference might only be about 75 cents on the dollar.
- Ask the rep how your property's location (fire, flood, hurricane, or seasonal weather risk) affects your premium.
-
The speaker's claim involved a flat roof where rain sat for weeks, leading to collapsed ceilings and a garage collapse about two weeks later, with some mold found afterward.
-
He says he had a very difficult time finding a licensed contractor willing to complete the repair for the $25,000 remaining after the deductible, given the job had been bid at $35,000.
-
These are the speaker's personal experiences and opinions, not professional insurance or legal advice.
Bottom Line
A lower premium is only a savings if you can comfortably cover the deductible yourself, and rental owners should verify whether their policy protects the contents of the home as well as the structure.
