As Summer Approaches, Vacation Rentals Rise in Popularity
As we head into summer, the demand for short-term vacation rental condominiums continues to rise. iPropertyManagement.com reports the vacation rental industry is growing, even during periods of economic difficulty, due in part to vacation time being seen as essential to mental and physical well-being.
Many travelers are forgoing the traditional hotel experience in favor of using companies such as Airbnb or VRBO to find condos for anywhere from one night to a few months. Current vacation trends suggest millennials make up a large group of travelers who are spending more on experiences rather than possessions. This group prefers short-term condo stays over hotels because they can choose from a wider variety of locations and have access to a full kitchen, where they can cook their own meals.
Condo buildings line North American coastlines for travelers seeking beach vacations. There are also plenty of investment opportunities in areas sought out by outdoor adventure seekers as well as urban destinations, such as condo units near professional sports arenas. Property investors recognize that travelers enjoy the experience of searching for, booking and communicating online about a condo that meets their needs. In fact, 53% of all travel is booked online.
Condo unit owners enjoy the luxury of not having to deal with traditional home maintenance, such as mowing the lawn, fixing the roof or shoveling snow. These characteristics of owning a residential condo make it ideal for buyers who seek low overhead and do not wish to spend much time maintaining their property.
However, unlike the single-family dwelling investor, condo unit owners have unique exposures that require a thoughtful insurance product to meet their needs. Consider the following claims examples:
- An insured rents their beach condo to a family for the weekend. One of the children trips over a lamp’s electrical cord and breaks their arm. The tenant sues the insured for medical payments and failure to maintain a safe environment, and the insured incurs a claim of $6,400.
- A guest trips and falls on the outdoor patio area of a condo building, injuring her leg. She sues the condominium association for medical expenses, and the association’s general liability policy will respond. However, the association has a $10,000 general liability deductible, which is assessed to all owners, requiring each owner to pay $1,000.
Some carriers rate condos using a dwelling class code and use industry-standard coverage forms. USLI’s Residential Condo Investors product is specifically designed to meet the unique characteristics of condo ownership, and it uses tailored coverage forms that satisfy these specialized needs. A few notable product advantages include:
- Loss assessment coverage for both property and general liability
- No minimum rental period as long as the entire unit is rented at a time
- Property coverage available on special cause of loss and replacement cost, with no requirements for building or roof age
- Theft coverage is not restricted
- Up to $1 million in property coverage per unit; $3 million per building/complex
- Third-party water damage coverage available
Common ineligibility characteristics are student tenants, condos that are owner-occupied for most of the year and wood-burning stoves.
Quote your condos quickly online, over the phone or by sending an application to your Commercial Lines underwriter. We can also schedule up to 50 locations/units when packaging property and general liability and up to 100 units for monoline general liability.
As always, thank you for your support and business.
Written by Elizabeth Shults
June 3, 2021