Why Your Homeowner's Policy May Void Your STR Claim

If you own a short-term rental (STR), there’s a good chance your insurance policy isn’t doing what you think it is. Many STR owners, especially those just getting started, assume their existing homeowner’s insurance will protect them in the event of a claim. Unfortunately, that assumption can be a six-figure mistake.

Here’s the problem: most traditional homeowner’s policies contain a “business use exclusion” that specifically voids coverage if the property is used in a commercial capacity. Renting your home or investment property on Airbnb or Vrbo, even occasionally, often counts as commercial use in the eyes of your insurer.

Real Example: A Denied $100,000 Claim

A property owner in Texas suffered major water damage after a pipe burst during a winter freeze. They had hosted Airbnb guests earlier that month. During the claims process, the insurer asked whether the property was ever used as a rental. When the owner disclosed the Airbnb activity, the claim was denied on the grounds that the property was used for business, which violated the terms of the homeowner’s policy.

The owner was left paying out of pocket for a $100,000 repair bill, because their insurance wasn’t aligned with how the property was being used.

Why This Happens

Insurers view short-term rentals differently than traditional owner-occupied homes. Hosting guests introduces:

• Increased foot traffic and risk of accidents

• Potential property damage from short-term occupants

• Higher liability exposure (especially for guest injuries)

These risks require a different underwriting model and policy language than a typical homeowner’s plan provides.

How to Know If You’re at Risk

Ask your insurance agent the following questions:

• Does my current policy cover short-term rental activity?

• Is there a business use exclusion in the policy?

• If a guest is injured or causes damage, am I protected?

If your agent hesitates or says “probably” or “maybe,” that’s your cue to dig deeper—or get a professional policy review.

What You Can Do Now

✅ Review your current policy to check for business exclusions, liability limitations, or short-term rental restrictions.

✅ Upgrade to a proper STR policy: carriers like Proper Insurance, CBIZ, or Steadily specialize in this niche.

✅ Get a second opinion from an expert who understands STR risk...not just an agent trying to sell you a product.

Want Help?

At Crystal Clear Property Partners, we specialize in helping STR owners identify dangerous gaps in their current coverage. Our Insurance Clarity Report gives you a plain-English analysis of your policy, flags the biggest risks, and includes a smart question guide to use with your agent.

For a small fee, you get clarity, confidence, and peace of mind, without sales pressure or upsells.

👉 Get Your Insurance Clarity Report Now