Travel Insurance Review

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3 Steps to Insure your Vacation Rental

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3 Steps to Insure your Vacation RentalThese days, most people agree that the ‘staycation’ lasts only a year at most and then couples and families typically get back to real vacations pretty quickly.

The old days of being limited to staying in a hotel, however, are long over and many travelers – even solo travelers – have turned to vacation rental properties as a good alternative to hotels.

Vacation rental properties come in the form of single rooms, condominiums, apartments, even entire houses, yachts, tree houses, airstreams, and castles and they come in all sizes and are available nearly everywhere.

Some great sites for finding vacation properties include: Vacation Rentals by Owner, HomeAway, Airbnb, and more.

In addition to the ability to live like a local, some of the most important reasons travelers like vacation rentals instead of the hotel are:

  • More room and more privacy – travelers can come and go or stay as they please without disturbing room service and without having to check in and out like with a bed and breakfast
  • Stay comfortably together as a group – an excellent option for extended family or large groups of friends
  • Cost savings – paying for several rooms to house a family with children can be cost-prohibitive whereas a rental condo, apartment, or house allows everyone more room, access to a kitchen to save money on meals, and the ability for families and groups to stay together

If you’re looking at booking a vacation rental for a Spring Break getaway or thinking ahead to your summer vacation, it’s a good idea to consider your travel insurance options at the same time.

What are the concerns/risks with a vacation rental?

As with any insurance plan, you purchase it to protect yourself from the unknown – those things that can happen, but hopefully don’t happen. This is why we buy car insurance, to protect ourselves in the event of an accident, even one with another motorist who doesn’t have insurance.

It’s also why we buy travel insurance, to protect us from losses that we cannot predict:

  • A hurricane is pending and you’d like not to be there when it happens.
  • Your kid becomes very ill and you have to head to the mainland hospital and abandon your vacation.
  • Some projects at work are not gelling and you have to cancel your trip to handle them – and keep your job.
  • Your own home is vandalized and you have to cancel your trip to handle the problem, file insurance papers, assess the damage, etc.
  • A family member dies.
  • You’re the victim of an assault and you need to stay home and recover.
  • The airline suddenly filed for bankruptcy and cancelled all flights.

Life is unpredictable, and life while traveling is just unpredictable in another location, so it stands to reason that smart travelers protect themselves from expensive losses when they spend a lot of money on a vacation rental.

Avoid the Travel Insurance Offered with your Rental

Many experienced vacation rental property managers offer their guests standard travel insurance with their rental agreement and they’ll include language like this in the contract agreement:

Cancellations that are received in writing between 30 and 60 days prior to arrival date qualify for a 50% refund. There are no refunds for reservations cancelled within 30 days of your arrival date. Travel insurance for unexpected cancellations is recommended to all our guests.

This is a great way to protect themselves, but their travel insurance plan may not protect you as well as it protects them.

Let’s look at some examples – what if:

  • Someone gets very sick before the trip and you have to cancel? With the right travel insurance plan, you’ll have coverage for up to 100% of your trip investment if you have to cancel for an illness or injury.
  • You’re in a traffic accident on the way to your vacation? Sounds awful, but it could happen and if you cancel your trip by default (you’re in the hospital), you can bet that standard travel insurance plan isn’t likely to send you a check for your loss.
  • Someone on your trip or back home has a pre-existing medical condition? If you have to abandon your trip to be at your father’s side in the hospital and he’s in there because of a pre-existing medical condition, is that standard travel insurance policy going to refund the remainder of your trip investment? Likely not.

Even more concerning – does their standard travel insurance plan cover:

  • emergency medical care?
  • trip interruptions?
  • medical evacuations?

If your vacation rental requires a ferry ride to get to the front door, you’re going to want to be sure you can reach medical care if you need it. Sometimes an evacuation is the only way to go about that.

You can spend the time studying their policy and comparing it with other travel insurance plans, or you can plug your trip details into our travel insurance comparison tool and select the options you need while price-shopping among many plans from many companies.

3 Steps to Insuring Your Vacation Rental

Use the following steps to prepare to cover your vacation in a vacation rental property:

  1. Gather your planned trip details, including:
    • The number of people and their ages
    • Your vacation dates – starting the day you leave until the day you return
    • The date you made the first trip payment (see why this is important)
  2. Total up your non-refundable trip costs, including:
    • Pre-paid, non-refundable airfare
    • You pre-paid, non-refundable lodging costs (remember, even many hotels now have refund restrictions for rooms booked online)
    • Any pre-paid, non-refundable tours, boat reservations, ferry tickets, and more
    • See What determines my total trip cost? for more details
  3. Think about where you may need special coverage, like for:

After you’ve chosen your plan, you have a certain number of days (usually 10-15) to review the plan and make changes or cancel it. See Understanding your Free Look Period/Refund Policy for details.

Finally, to be 100% confident you have the right plan, see this topic.

Remember: Even Travel Insurance Doesn’t cover ‘Everything’

It’s important to note that travel insurance, just like every other type of insurance, doesn’t cover ‘everything’. The following are just a few things that will not be covered with your vacation travel insurance:

  1. Losses due to hurricanes and/or mandatory evacuations (unless your plan specifically covers these events).
  2. Loses due to changing your mind or deciding you can’t go (but ‘cancel for any reason’ coverage can help here).
  3. Losses due to lousy weather conditions (although you can purchase ‘cancel for any reason’ coverage and cancel before your trip starts if you decide you’d rather skip it because of the weather).

For more information about what travel insurance does not cover, see this topic too:

8 Things Travel Insurance Will Never Cover – Ever

In addition, and especially with a vacation rental, your travel insurance won’t cover damage to the rental property itself. Unfortunately, the vacation property owner’s insurance may or may not cover the damage either, and you can be sure that their rental agreement spells out the terms for things like carpet burns, broken furniture, etc. If something gets damaged, you’ll likely have to pay for that yourself.

What Determines My Total Trip Cost?

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What Determines My Total Trip Cost?Travel insurance is designed to reimburse travelers for unexpected losses, and travel insurance plans with trip cancellation or ‘cancel for any reason’ benefits ensure that a traveler who has to cancel their trip doesn’t also have to forfeit their trip investment (provided they cancel their trip for a covered reason).

Most travel insurance plans require that a traveler insure all their non-refundable travel arrangements that are subject to cancellation penalties in order to have certain benefits.

These include but are not limited to the following:

See 5 Reasons to Purchase Travel Insurance Early for more details.

This means that even if you purchase a travel insurance plan on time (within the required number of days after making your initial trip deposit), you might not be able to cancel your trip for a full refund if you haven’t covered all your pre-paid, non-refundable trip costs.

When you’re filling our travel insurance quote form, you’ll see the selection here:

Compare travel insurance quotes

When getting a travel insurance quote, you’ll need to calculate your total trip cost, which is the cash value equivalent of all arrangements that were booked and paid for.

What factors determine total trip cost?

Your trip costs are determined by adding up the total of the pre-paid, non-refundable expenses that would be lost if you had to cancel your trip. These include:

  • All non-refundable payments, including deposits, toward your trip: hotel, airfare, cruise, etc.
  • Pre-arranged, pre-paid transportation costs like taking a pre-paid shuttle to and from the airport
  • Non-refundable fees you pay for before you leave, including those fees related to tours, conventions, classes, or retreats
  • Any cancellation penalties that you’ll be assessed if you suddenly cancel, such as in the deposit for a condo on the beach (check your rental agreement for the cancellation penalty schedule)
  • Non-refundable tickets such as those to the theater, special events, Disneyworld passes, etc.

What costs are not included in my total trip cost?

These costs are not pre-paid and so they should not be included in your total trip cost:

  • Meal and lodging costs you pay after you arrive
  • Day trips or excursions arranged for and paid for after departure
  • Souvenir, gift, or other costs for items you purchase during your trip
  • Emergency passport replacement costs (although many travel insurance plans have an allowance for those costs if your passport is lost or stolen while you’re on your trip)
  • Any other costs that were not pre-paid

If you include these in your total trip cost amount, it amounts to over-insuring your trip because these costs will not be reimbursed to you.

Do not include these costs in your total trip cost!

Do not include the costs associated with any pre-paid expenses that can be changed. This is where a lot of travelers make a mistake. It’s important to remember that travel insurance only reimburses you for losses.

If the bed and breakfast you reserved in Paris doesn’t allow for cancellations, but they will happily reschedule your stay, then it’s not a loss and you won’t be reimbursed for those costs by your trip cancellation coverage even if you can’t take your scheduled trip for a covered reason.

To protect your trip investment, think carefully about where you book your lodgings, tours, retreats, etc. If their ‘cancellation’ policy doesn’t allow for true cancellations, then reconsider and don’t include those costs in your total trip costs because they won’t be covered anyway.

What about airline ticket purchased with points?

If you purchase your airfare with points or frequent flyer miles, check the rules of your plan. In many cases, if you have to cancel your trip, the airline will re-deposit those points minus a fee.

In brief, you’ll include these costs in your total trip cost amount:

  • The fee to re-deposit your frequent flier points or miles
  • The taxes paid on the airline tickets

Essentially, the fee to reimburse your account with your points is non-refundable, but the ticket cost itself is not.

What if I don’t know all my trip costs – should I estimate?

If your total trip cost is unknown, and you want to purchase your policy in time to take advantage of certain benefits that require early purchase (typically between 10 and 14 days of your initial trip deposit) to be in effect, including but not limited to:

  • Pre-existing condition waivers
  • ‘Cancel for any reason’ benefits
  • ‘Cancel for work reasons’ coverage

It’s wise to round up in order to avoid being precluded from access to these coverage options.

If you later discover that you’ve over-insured your trip, the policy can be updated to reflect the accurate trip cost and the difference in the premium will be refunded to you as long as the changes were made prior to your departure.

What happens to your trip if the B&B is destroyed by fire?

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inn fireWhat happens to your travel investment if the B&B where you had reservations is destroyed by fire?

We decided to look into this scenario to find out how travelers can protect themselves. Remember, if you’ve planned a B&B stay, your trip may involve flight costs as well as other pre-paid trip costs, which may or may not be able to be cancelled for a refund. So, when we are speaking about one portion of your trip being destroyed by a fire, i.e., the bed and breakfast, it’s important to recognize that there are other trip costs covered by your trip cancellation coverage.

To start, we researched to find a plan with trip cancellation that included fire in the description of coverage. We quickly found that trip cancellation with Worldwide Trip Protector Gold from Travel Insured International is allowed in this instance:

Natural Disaster at the site of Your destination which renders Your destination accommodations uninhabitable.

… and we further read into the policy definitions to ensure that ‘natural disaster’ included fire and found:

“Natural Disaster” means flood, fire, hurricane, tornado, earthquake, volcanic eruption, blizzard or avalanche that is due to natural causes.

So, at least this plan would allow you to cancel your entire trip in the instance your destination B&B is destroyed – and rendered unhabitable – by a fire.

A word of caution: if the innkeeper gives you a refund for your payment, that amount will be taken out of the amount reimbursed by your travel insurance company, which makes sense.  In many cases, the innkeeper can re-book your stay with a partner inn, and in that case you will not have a covered reason to cancel your trip.

The plan we discussed here is just one plan with this type of coverage. There are many other travel insurance plans that will cover your trip costs if you have to cancel your travel plans due to an inn fire, so if that type of protection is important to you, it’s crucial that you carefully review the description of coverage and remember that the destination lodging must be rendered uninhabitable.

See a full review of bed and breakfast or inn travel insurance.