Property owners who rent their homes and apartments out for short periods of time have special property insurance needs. Similarly flippers, who are real estate investors who buy homes to renovate and resell for a profit, also have unique concerns for their homeowner's insurance policy. What should these investors look for when shopping for short term rental insurance?

Short Term Rental Insurance

Property sharing sites, such as Airbnb or VRBO, are a great way to make profits in the real estate market. Shorter rental terms generally mean fewer repairs and payment problems for landlords. Renters are also usually willing to pay above market prices.

Your current homeowner's insurance policy probably doesn't cover home sharing activities like temporary rentals. Those who want to open up their properties for profits might need a few different coverages to protect their financial interests.

• If you're planning an extended vacation and want to rent your primary residence out while you travel, your insurance company may allow you to extend your current coverage to the temporary occupants. Talk to your insurance agent for more information.

• Companies that don't allow you to apply your own coverage to your temporary renters may be able to buy an endorsement to cover that period. An endorsement is a special addition to an insurance contract that expands the coverage in a specific way.

• When temporary rentals become a habit, homeowners will need to secure a commercial property insurance policy. You may also need a landlord's policy. These specialized contracts provide coverage for all the structures on your rental property.

In each of these cases, your temporary renters should consider getting their own coverage with a traveler's or renter's insurance policy.

Insuring Your Flip

Thanks to current market conditions, real estate investors are once again enjoying record-high profits by buying homes, performing renovations, and putting them back up for sale. Between the purchase and resale, investors need short term insurance policies to protect their collateral. There are two popular options that cover most of the flipping process.

• Vacant building policies protect structures and grounds while the home is uninhabited. If the property sustains damage from vandals, fire, or water, these policies will help you pay to repair the effects.

• When renovations begin, investors will need to move to a builder's risk policy. This coverage protects your property and materials during the construction phase from a range of threats and natural disasters. It does not, however, cover things like employee theft, contract penalty, and damage due to faulty building design.

Once construction is complete, flippers can switch back to a vacant building policy while waiting for the home to sell.

Brashears Insurance customizes short term rental insurance for all types of real estate investors in the Santa Barbara, CA area. Contact us to learn how we can protect your profits with insurance coverage.