Protecting Property Investments with Excess CPL

Personal
// June 6, 2019

According to 2018 National Association of Realtors research, 30% of vacation property owners and 32% of investment property owners planned to rent their homes as short-term rentals last year. As the number of properties rented on a short-term basis continues to rise, policyholders need to ensure they have adequate coverage.

Coverage needs will vary depending on the individual, but those seeking higher limits can find the right coverage through a Personal Umbrella or an Excess Comprehensive Personal Liability (CPL) policy. State laws will also impact coverage, as many states are now requiring that short-term rentals carry higher limits.

For example, Massachusetts recently passed a law stating anyone intending to operate a short-term rental must notify the insurer that writes the homeowners or renters insurance policy for the property. Not only that, Massachusetts requires a $1 million liability policy for the short-term rental (Agency Checklists).

Although the statute allows insurance policies provided by hosting platforms to meet the requirement, policyholders should be aware that these policies may not provide all of the coverage they need, such as personal injury coverage. For example, if the insured has a bad experience with a guest and writes a review regarding the experience, they could be sued by the guest for defamation of character. According to a HuffPost article, this would not be covered through the Airbnb insurance program.

Furthermore, insureds need to understand that they could suffer great losses in today’s litigious society. Consider the following real-life claim scenario: A rental home was in great condition; however, the policyholder failed to replace the batteries in the smoke detectors. When a fire ensued, the alarm did not sound to wake the tenants. Due to the severity of injuries from the fire, the insured’s primary limits of $500,000 were exhausted. If they had an Excess CPL policy in place, they would have had the appropriate coverage for the settlement in excess of their primary limits.

An Excess CPL policy is a great solution for those who rent their homes. USLI’s Excess CPL product offers the following features:

  • Follow form
  • Provides personal injury coverage if it is covered on the primary policy
  • Both short-term and annual rentals are eligible
  • Limits up to $5 million
  • No restriction on length of occupancy

It is becoming more apparent that individuals need to obtain higher limits to protect their assets — especially when they own rental locations, as their exposure to risk is increased. Please contact a Personal Lines underwriter today for a quote or to hear more about our Excess CPL product!

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As always, thank you for your support and business!

Contact Laura Detore
Underwriter | 888-523-5545, ext. 2615

Written by Erin Moul
June 6, 2019

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