Do you have insurance? Of course, everyone who runs a vacation rental business knows you need insurance. Do you have enough insurance? Do you have the right insurance? Are you SURE you are covered in the event of anything that might happen? Maybe the answers to the last 3 questions are not as convincing as the first question's answer.
In this episode Sarah and T are out to save your backside. We assure you that you will learn some things in this episode that could save your business! So listen up and get ready for our hosts to drop some knowledge on you!
Disclaimer: we are not insurance agents nor do we play one on TV. Everything we say here should be verified with your insurance agent and not hold us liable for anything we say that turns out to be incorrect.
Many thanks to Tim's insurance agent, Larry Barker of Towne Insurance Agency in Kitty Hawk, North Carolina for giving us the 411 on insurance of all types in the vacation rental business.
In this episode, we cover:
- Liability Insurance
- Workman's Comp Insurance
- Errors & Omissions
- Vehicle insurance for employees driving company vehicles & their own vehicles
Vacation rental managers small or large are ultimately responsible for finding and keeping tenants (aka "guests") on someone else's property. To be successful at this, they must do the following five things:
1) Negotiate, sign and enforce leases (aka Guest Agreement or Contract)
2) Collect rents
3) Make repairs
4) Conduct routine maintenance
5) Ensure the safety of guests
Each one of these five comes with its own set of risks and that's why there's property and liability insurance designed to protect. Let's talk about the protection you need to cover these five activities:
1) Professional Liability insurance aka "errors and omissions" coverage. This coverage protects you when you forget to purchase appropriate property insurance, resulting in a loss for the homeowner, wrongful or negligent evictions, discrimination claims, and other failure to perform professional duties according to your contract.
**big reason to get this - commercial general liability may not provide coverage for any expenses related to professional liability claims or suits.
It does need to be said that errors & omissions does NOT usually include criminal, fraudulent, or malicious acts, bodily injury and property damage, workers compensation claims, and punitive damages.
2) Property & Liability Insurance - two biggest risks in our line of work relates to property maintenance and contract negligence. There are often questions about who - the manager or the property owner - has the "insurable interest" on the building.
a) Commercial property insurance - this protects the VRM's assets after a physical loss due to smoke, fire, wind, hailstorm, vandalism, and other events. It all depends on the wording in your contract as to whether you are responsible for keeping this coverage on buildings you manage.
b) Business income insurance aka "business interruption insurance" - this is typically included in a commercial property policy. It protects your earnings if you can't collect b/c of storm, fire, etc.
c) Commercial General Liability - (read from Larry's doc - I have it printed and ready to go)
If you want to get everything we have discussed to date, ask your agent about a BOP - business owner's policy which includes property coverage, liability coverage, AND business income insurance.
ADDITIONAL insurance coverage to consider:
1) Non-owned auto liability coverage - should be purchased if you or your employees drive personal vehicles for busines