Nick Massey thinks short-term rental owners and operators need to know that liability is one of their biggest sources of risk. 

It’s an unfortunate world that we live in in the U.S. market where we’re super litigious. You can just look up ‘Airbnb injury attorney;’ there are tens of thousands of results on Google, where they’re targeting, ‘Were you injured in an Airbnb?’ And I hate to say it, but they want to sue you.

Massey is the director of sales at Proper Insurance, the nation’s leading provider of short-term rental insurance. He sat down with Nectar’s Head of Strategy and Growth Walker Skaar to talk about some of the biggest liability risks facing short-term rental operators today, as well as practical tips for mitigating risk and choosing the right insurance policy.

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What are Short-Term Rental Owners and Operators Liable For?

As a short-term rental owner or operator, you may be held liable for any accident or injury that occurs on your property. 

“If somebody slips and falls in the bathtub, who’s at fault? Was it because it wasn’t cleaned properly and there’s slippery soap scum? It’s your responsibility as a property owner to maintain that. Did you fail to put proper depth markers or signage around the pool? Does your gate properly lock, or is the hinge kind of broken?” Massey asked. “That can turn into a major liability risk, and ultimately a lawsuit.”

Beyond dangerous amenities like rope swings, ziplines, and trampolines, there are a few other things that Massey encourages STR owners and operators to avoid. Pool inflatables can make drowning or other injuries more likely, and baby equipment like pack and plays add unnecessary risk for the owner. Even security cameras can be a liability because of invasion of privacy claims.  

On the other hand, additions like a noise monitoring system and a well-located fire extinguisher can help decrease your risk of property damage. 

In addition to working with an insurance company like Proper that understands the unique risk factors of STRs, Massey recommends getting a third-party safety inspection before you list a new property.

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Choosing the Right Insurance Partner

Just because someone is willing to insure your short-term rental does not necessarily mean that they have the experience and knowledge needed to structure your policy correctly.

“This market is not cookiecutter in any shape or form,” Massey explained. “Part of specializing in this industry, around these liabilities, is educating the homeowner about how to mitigate these risks.”

The same logic applies when choosing between a cheap insurance plan and a more expensive one. If a policy is cheaper than the alternatives, make sure you always ask yourself why that might be. There’s almost always going to be something that’s missing from that policy that explains the price. 

“Don’t go cheap on insurance to try and maximize your revenue, because if you have a claim denied because you went with cheap insurance, you don’t have any more revenue. You are paying for that stuff out of pocket. So it’s always going to end up costing more in the long run if you don’t do it right the first time,” Massey argued.

And if the price difference between a higher level of coverage and a cheap policy is significant enough to majorly impact your business, that’s probably a sign that your cash flow is not what it should be. 

“You see a lot of folks not pulling the trigger on the better insurance because that $1,500 is so grossly affecting their cash flow that they can’t figure it out,” Massey shared. “If your property is going to be that severely affected by losing $1,500 in cash flow, it’s not a good investment.”

To learn more about the unique benefits of partnering with Proper Insurance on your short-term rental insurance policy, visit their website.