Are you considering a shift to midterm rentals? This business model offers more flexibility than year-long leases and less turnover than vacation rentals, making it an attractive option for property owners.
But if you want to offer midterm stays, insurance is a major consideration. Standard homeowner’s policies won’t protect you against damage, liability claims, or lost income. These small gaps in coverage can lead to months of lost earnings should the worst happen.
Researching policies and making sure you’ve got the right midterm rental insurance should be one of your first steps to setting up your new business. Our guide can help you get started, showing you the importance of getting insured, coverage options, and practical tips for mitigating risk.
Best of all, we’ve included perspectives from both sides of the topic — property managers and insurance carriers — to give you the full insights.
Why does your midterm rental need insurance?
Let’s start with the obvious: Your midterm rental needs proper insurance because almost every jurisdiction requires you to get some kind of coverage to use your property as a business. Most places won’t let you start accepting guests until they can see proof you’ve got a policy.
Midterm rentals also need property insurance to protect you against unexpected and costly setbacks. For example, one small fire can cause significant damage and take months to repair. Insurance means you can focus on getting your business back on track rather than worrying about finances.
The challenge is that midterm rentals occupy an unclear zone between vacation homes and tenancies. Homeowners insurance and landlord policies won’t usually cover you, but short-term rental policies might not apply either. Getting a full range of coverage or a specialized solution is the only way to ensure you’re shielded from risk.
Types of insurance coverage for midterm rentals
The insurance you need depends on details like local regulations and potential risks to your business. But here’s a general look at the types of coverage you should consider for your midterm rental:
Landlord insurance
If you typically rent your property for six months or more, landlord insurance is the standard option. It covers the structure of your building and provides liability coverage if anyone gets injured.
But bookings for midterm rentals can vary. Some clients may wish to reserve your property for as long as a year, while others might only want to stay for a month. Landlord’s insurance won’t protect you during these shorter durations, leaving you with gaps in your coverage.
Vacation rental insurance
Vacation rental insurance protects your property during short-term stays, filling the gaps in your landlord policy. It typically protects you against guest-related damage and theft.
Some listing sites like Airbnb and Vrbo offer damage protection as part of their services. While these programs offer some advantages, Vice President of Insurance Navy, Rami Sneineh, says he wouldn’t depend on them. “They count as secondary coverage, which means you have to claim first with your personal or business insurance, sometimes resulting in non-renewal.”
Hybrid or flexible-stay insurance
Instead of layering coverage, you can get specialized midterm insurance. It protects you against the same risks as short-term and landlord’s policies.
But Tim Choate, Founder and CEO of Red Awning, says finding the right broker is essential here, given the specialism needed. “Midterm rentals exist in a legal gray area: too short for regular landlord policies, too long for vacation rental programs. An experienced broker can design a hybrid package that actually reflects the way you operate.”
Loss of Income Coverage
If you run a business, you need insurance that specifically covers your earnings. Loss of income coverage can provide you with the finances you need to pay bills and expenses while your property is out of action.
Sneineh says this type of insurance often gets overlooked. “Clients commonly think their policy will pay for lost bookings after a covered loss such as fire or a serious water leak, but this is not the case. Standard policies do not cover this, and even specialized policies may need a specific “loss of rental income” or “business interruption” endorsement.”
He adds: “In my practice, I have seen operators lose well over $20,000 in revenue over a three-month repair period because they didn’t have this particular rider, which could have cost them an extra $300 per year.”
Liability coverage
Although rare, claims made against you after an accident can have a big financial impact. As Sneineh says, “Property damage has a specified limit, which is the replacement cost of the property and its contents. However, liability is almost unlimited, and one major guest injury claim could easily surpass $1 million.”
Sneineh says that’s why liability insurance should be your top priority. “It protects you if a guest is injured on your property or if they accidentally cause damage to third parties, covering legal costs and potential settlements so your bottom line stays secure. It is especially important as it helps cover legal fees, settlements, and court costs, protecting you from potentially costly claims.”
Contents coverage
Midterm rentals are usually furnished, so they’re ready for guests to move into. Contents coverage protects all the items you buy, such as furniture, electronics, and appliances.
While contents coverage may not seem like a priority, consider that most guests will be traveling professionals. They’re used to staying in hotels. High-end furniture and appliances can help you meet their expectations — but make repairs all the more expensive.
Key factors influencing midterm rental insurance premiums
After deciding which insurance you need, the next step is calculating costs. Insurance companies tend to look at a wide range of factors when assessing risk and setting pricing, so getting an estimate is challenging. But let’s look at some of the most important factors to give you a rough idea:
- Property size: The larger your real estate, the more it costs to insure. Companies must factor in the cost of replacing all the extra materials if something happens to the building or any of its features.
- Property age and condition: Similarly, older properties tend to cost more to insure. Your insurer will see it as more susceptible to risk.
- Location: Sneineh says, “Location is the single most significant factor that increases premiums, particularly in areas where natural disasters such as hurricanes, wildfires, or floods are expected to occur. A property in a high-risk flood zone located in Florida may have premiums 150% to 200% higher than a similar property in a low-risk area.”
- Attractive nuisances: According to Sneineh, the next biggest factor is your property’s features and amenities. “Enticing factors such as swimming pools, hot tubs, and trampolines are considered material liability risks by insurers. The addition of a pool can add 40% or more to the liability component of a premium due to the enormous increase in the potential of the occurrence of guest injury.”
- Claims history: If a property owner has a history of claims, insurers will see that as a red flag. A clean record can keep your premiums lower.
How to choose the right midterm insurance policy
Now that we’ve looked at the different types of coverage and what can affect the costs, the next step is actually picking insurance. Choate says the trick is to work from the use, not the policy.
Confirming your business status is a good place to start. Choate says, “First, we inquire whether the property in question was being used as a business or residential rental within the insurer’s definition. If it is making money through rotating stays, you are likely to need a commercial or special short-term rental endorsement.”
Choate adds that looking closely at the terms helps to pinpoint what you need. “We next search for coverage that specifically includes “transient occupancy,” “business use,” and “loss of income.” That blend covers the entirety — from guest damage to loss of earnings following an insured event.”
Don’t be afraid to ask questions during the selection process. You can approach multiple insurers and ask them for the essential details upfront, like estimates and exclusions. Compare what’s on offer and see who can give you the best deal.
Tips for mitigating risks in midterm rentals
Although insurance can offer you some protection, damage and disruption still cost you some business momentum. Get comprehensive coverage “just in case,” but use the following strategies to reduce the potential risks.
- Screen guests carefully: Always verify IDs, get references, and do background checks so you know who you’re letting into your property. Hostfully’s guest screening integrations let you automate this process to save you time and give you the broadest range. If you’re hosting professionals on behalf of a company, you can also expect their assistance.
- Create an agreement: Draft a legal document where you clearly outline house rules and guidelines. You can have guests sign before they check in. Hostfully’s Property Management System (PMS) lets you send these via email and collect electronic signatures.
- Install safe devices: Equip your property with smart devices that help you monitor your property and keep it secure. Hostfully offers a wide selection that integrates with our PMS, such as locks and noise detectors. These help you spot break-ins sooner or notice when your guests are having an unauthorized party without breaching their privacy.
- Conduct regular inspections: Routine checks can help you spot issues before they escalate. Look at your electrical systems, plumbing, and appliances for possible maintenance issues. And don’t forget to check the outdoor area for risks like loose roof tiles or broken tree branches.
- Maintain open communication with guests: Guests are the most likely to notice potential issues when they arise. Encourage them to ask questions and send updates with regular check-in messages. You can use Hostfully’s unified inbox to create templates and schedule them for suitable times during the stay.
How Hostfully protects your midterm rental properties
Protecting your midterm rental means you need insurance that covers every possibility. That’s how you not only keep your business running but also get peace of mind.
Hostfully makes this easier by helping you manage both prevention and protection. Through our PMS, you can:
- Access integrated insurance partners for specialized coverage
- Automate guest screening to reduce risk
- Collect and manage signed rental agreements digitally
- Monitor properties with smart home integrations
- Communicate with guests from one unified inbox
Smarter, automated management lets you focus on the big-picture details like expanding your portfolio and targeting new guests instead of getting bogged down in policies.
FAQs
What is midterm rental insurance?
Midterm rental insurance is coverage specifically designed for properties accepting guests for extended stays. It fills the gaps between standard landlord policies and long-term rentals.
Do I need special insurance for midterm rentals?
Whether you need special insurance for midterm rentals depends on your business model. If you usually host guests for longer than six months, you may qualify for landlord’s insurance. Otherwise, you should apply for specialist policies.
How does midterm rental insurance differ from short-term rental insurance?
Midterm rental insurance covers longer stays than short-term rental insurance. The right policy should still protect you against the same risks, though: property damage, theft, and liability.
What does midterm rental insurance typically cover?
Midterm rental insurance typically covers guest-related property damage and theft. It should also protect you against liability if anyone gets injured or sick while on site.
Can my tenants get their own insurance for a midterm rental?
Yes, tenants can get their own insurance for a midterm rental. They usually arrange this themselves and go through a different insurance carrier, but you’re free to give them recommendations.
