Since I’ve owned my cabin, I have come across several cabin owners that don’t have proper insurance for their STR cabins. I’ve been an insurance agent for 30 years, and it really does startle me that many folks think they are adequately covered, when in many instances they may not have coverage at all.
NO primary carrier will cover our STR cabins as a 2nd home or vacation home. This includes companies like Safeco, Travelers, Allstate, Hartford, Liberty Mutual, State Farm, USAA, Nationwide, Progressive, etc….virtually every carrier the average American has heard of. It MUST be a specialized dwelling policy customized for the STR market.
As cabin owners, we have many challenges we face specific to the rural nature of our properties. There are also many other reasons why the standard insurance market does NOT want to insure our STR cabins:
- Our cabins are in the middle of a forest.
- Our cabins don’t have access to fire hydrants.
- We don’t have a full-time fire dept (only voluntary) which is likely several miles away from our cabin. By the time they get to your cabin it’s most likely a total loss.
- We rent to people we don’t know, and may have as many as 100+ different families occupying our cabins within a year’s time. And let’s face it, our guests exhibit MUCH more risky behavior than owners do.
- Many cabins have buried propane tanks (this fact alone would result in an automatic decline with most insurance companies as the tanks are much more susceptible to degradation being underground).
- As cabin owners, many of us rely on the STR income to pay the mortgage. If your cabin burns to the ground, don’t you want to ensure that you have insurance to replace the income? YES! Because you will still have to pay your mortgage. That’s another unique feature of a proper STR policy….rental income replacement while the cabin is being repaired or rebuilt.
- If you really don’t know what kind of insurance coverage your cabin has, you should IMMEDIATELY call your insurance company to make sure you are covered operating as an STR….for the structure, contents, liability, and for replacement of rent.
- And yes, proper STR coverage is EXPENSIVE due to all these issues!
So to recap, at a minimum, cabin owners should make sure their insurance carrier knows the cabin is a STR, and ensure they have proper coverage. Also, make sure the carrier knows you have a buried propane tank (if applicable), and that they don’t have a problem with it.
If your insurance company is not made aware of these facts, you may not even have coverage at all. And in that case, any claim you file WILL be denied. Whether the cabin burns to the ground, or the cabin owner gets sued by a guest for an injury that occurred at their cabin, the owner could be on the hook personally. And you guessed it, your personal home/umbrella policies will not cover the STR related claims or lawsuits either. The insurance companies are smart, they ALWAYS find out if an insured has misrepresented a STR as something else like a vacation home or 2nd home. Many carriers are now also doing on-sight inspections. If you don’t have the right kind of policy and the inspector sees a property mgmt. sign displayed, the policy will be cancelled.
