Short-Term Rental Insurance Costs in Europe

Short-term and vacation rental properties are booming worldwide, especially in European countries. U.S. News & World Report says that bookings in European holiday homes, villa rentals, cottage holidays, and residential vacation resorts jumped 28.3% in the first quarter of 2024.

As the vacation rental industry grows, so does the cost of short-term or vacation rental insurance. In Europe, insurance can be complex thanks to different regulations, laws, and legal systems in each country. This post will examine what short-term rental insurance covers, how much managers may expect to pay, and the factors behind setting premium prices.

What Does Short-Term Rental Insurance Cover?

Short-term rental insurance coverage in Europe varies across regions. Local regulations may dictate that covering certain liabilities is compulsory, but other nations might differ. Intricate legal systems and established tenants’ rights in some countries may require more comprehensive legal requirements than other localities.And in most countries it is hard if not impossible for home owners to find cover under their private policy, and homeowners find themselves forced to look for a traditional commercial policy.

In general, however, short-term rental insurance may include a few common items of coverage.

Property Damage

When a guest damages a property structure or contents — intentionally or not — short-term rental insurance usually covers the cost of repairs or replacement. Items covered include everything from broken furniture and appliances to structural damage from fire, smoke, or water.

Liability Protection

Public liability protects property owners and managers if a guest is injured or their personal belongings are damaged. It is especially important to become familiar with local laws regarding liability; legal systems in certain European countries may be more complex than others.

Premises liability covers incidents occurring on the property, but it doesn’t cover off-premises incidents involving property-provided amenities like boats or bicycles. Commercial liability — arguably the most suited to short-term rentals — is more expensive but comprehensive in off-premises coverage. Personal homeowner liability coverage is not recommended.

Legal Expenses

Short-term rental insurance can compensate for the cost of legal disputes with guests, such as eviction or security deposit issues. In some countries, legal expenses for maintaining compliance with local regulations may also be covered.

Additional Coverage

A short-term rental insurance policy can be amended to cover specific incidents or losses. These may include lost key replacement, emergency transportation, pest infestation, guests’ personal liability, and relocating guests to alternative accommodations in case of an insured event.

Why Should You Obtain Short-Term Rental Insurance?

The primary reason short-term rental insurance is beneficial is that it shields property managers and owners from liability, damage, and lost rental income. Costs of repair, and replacement can be too great for a small business to bear.

Some countries may require that short-term rental property managers obtain sufficient insurance. If a property is listed on a third-party platform like Airbnb, it may require its affiliates to get insured.

Most of all, having a rental property suitably covered by insurers brings a sense of comfort and reassurance that, should the worst happen, managers and owners will not have to endure extended financial hardship.

What Is the Short-Term Rental Insurance Cost in Europe?

Ultimately, the short-term rental insurance cost in Europe depends on several factors, including the type of coverage managers need. Coverage levels can be broken down into three general tiers.

Basic Coverage

A basic short-term rental insurance policy is the most affordable option, covering only liability and property damage. Typically, European vacation property managers pay between €300 and €600 a year for basic coverage. However inexpensive that may seem, it may not be cost-effective if more severe damage or injuries happen.

Mid-Range Coverage

Mid-range coverage includes all provisions of a basic policy along with contents insurance, and potentially higher liability limits. Generally, mid-range coverage can cost between €500 and €1,500.

Premium and Special Form Coverage

The most comprehensive European short-term rental insurance is suitable for high-end accommodations or rental properties requiring more coverage. There is no limit to how much premium coverage costs, but many policies fall within a range of €1,200 to €2,500.

Keep in mind that these are very general estimates for premium payments only. Your insurer may charge additional fees or surcharges for preparing and managing the policy. Make sure to vet every underwriter who offers a quote on the proposed coverage. 

What Factors Determine the Price of Short-Term Rental Insurance?

Short-term rental insurance cost in Europe is determined by several factors. As mentioned, the range of coverage a manager opts for is the most influential factor. Additional factors include the following.

Location

Vacation rental properties in high-end or exclusive areas are much more expensive, so their insurance premiums are likely to be more costly. Holiday homes located in areas that run a higher risk of natural disasters (earthquakes, floods, wildfires) also may cost more to insure.

Property Type

Because single-family holiday homes like those advertised on Airbnb typically have fewer risks than large-scale, resort-type rental properties, they may be less expensive to cover. Risks increase in multi-family or resort rentals, so coverage is usually more expensive in those structures.

Tenant Turnover Rate

Most short-term rental properties experience frequent turnover of guests — sometimes twice or more every week. This leads to more risk of damage to the property, so premiums are higher. Longer-term rentals with less turnover may face more affordable premiums.

Deductibles and Policy Limits

As with all insurance, policyholders who opt for higher, out-of-pocket deductible (sometimes referred to as excess) minimums usually pay less in premium costs. Lower deductibles usually generate more costly premium charges. Furthermore, policies in which the insurer caps coverage at higher limits take on more financial risk, so premiums are more expensive.

Claims History

Short-term and vacation rentals with extensive histories of filing multiple claims are understandably thought of as high-risk properties that cost more to insure.

Amenities

Rental properties with hot tubs, gyms, spas, extensive landscaping, and other amenities expose managers to higher risks than those with more limited features. Insurance premiums for those properties are more costly. 

CoverCat: Short-Term Rental Insurance and More

CoverCat provides comprehensive short-term rental insurance for reasonable rates. We also provide guest verification services. To learn more, reach out to us online to set up a consultation.