Vacation rental insurance is complex. For this reason, some property managers choose to self-insure, rather than working with a professional insurance company. The problem is, self-insurance opens your business up to a great deal of risk. It also doesn’t provide the level of protection guests, homeowners, and property managers need to stay safe in the modern vacation rental industry. Let’s look at the primary reasons why self-insurance can be a big mistake.

What is Vacation Rental Self Insurance?

Self-insurance is a simple idea. You collect a small fee upfront, before the guest stays with you, and hope that nothing goes wrong. Over time, you build up a sum of money that can be used to pay for guest-related damage pay. When something does happen, you pay out claims from the money you’ve collected over time. This might seem fine until something goes seriously wrong. 

Problem #1 – Zero Liability Coverage

The biggest problem with vacation rental self-insurance is that it does not take into account catastrophic liability, often resulting from bodily injury or major structural damage. If someone is injured while staying in one of your homes and chooses to make a claim against you, you could be held liable by a jury, even if your contract states you are not liable. Property managers without liability coverage could risk their business when something happens to their guests.

Problem #2 – Puts Property Managers’ and Homeowners at Odds

Since self-insurance requires them to pay out of their own pocket, many property managers can be reluctant to pay claims. This is not only bad for guest and homeowner relations, but it also could cause damages to go unfixed. At Safely, we have a high propensity to pay and we believe in the benefits of covering small damages. This improves your relationship with both your homeowners and your guests.  

Problem #3 – No Guest Screening

Self-insurance does account for the risk of the reservation. By collecting a fee upfront and not screening guests, you take the chance of renting to the worst guests and you don’t know which reservations to keep an eye on. Accurate guest screening is an essential part of protecting your business and your homeowners 

Connect with Safely to Grow Beyond Self-Insurance

Over the years, we’ve worked with many property managers who previously self-insured. And we’re very pleased with the results we’ve seen. Property managers who work with Safely gain a higher level of protection, which helps them retain and gain new homeowners.

Pam White from White Sail Realty, who uses Safely to protect her Newport Beach vacation homes, says it best

Prior to coming on with Safely, we were doing our own self insuring and that was working fairly well. It took away the security deposit and offered guests a certain amount of protection but it really didn’t give us the coverage that we needed. We found Safely and they have given us and our owners much greater protection; and that absolutely helps us acquire new homeowners.