Short-Term Rental Insurance Requirements in Las Vegas: Coverage Guide

Why Standard Homeowners Insurance Doesn't Cover STRs

Most homeowners policies contain explicit exclusions for business activities and commercial use of residential properties. Short-term rental operations trigger these exclusions, leaving you without coverage when you need it most.

Business Use Exclusions

Standard homeowners policies are designed to cover owner-occupied residences, not income-producing rental activities. The policy language typically includes clauses that exclude coverage for losses arising from business pursuits or commercial activities conducted on the premises.

When you rent your property to guests for compensation, you're engaged in a business activity. Insurance companies view this fundamentally differently than a homeowner simply living in their residence. The risk profile changes—more people enter the property, turnover increases, and the likelihood of claims rises.

If a guest is injured at your property and sues you, your homeowners policy will likely deny the claim based on business use exclusions. You'll be personally responsible for legal defense costs and any judgment against you. These costs can easily reach six figures for serious injury claims.

Short-Term Rental Specific Exclusions

Even policies that allow some rental activity often specifically exclude short-term rentals. The policy might permit long-term tenant situations (30+ days) but exclude rentals under 30 days or specifically mention vacation rentals, Airbnb, or similar arrangements.

Insurance companies recognize that short-term rentals create different risks than long-term rentals. The constant turnover, lack of established tenant relationships, and transient nature of guests increase claim likelihood. Traditional landlord policies don't adequately price or cover these risks.

Licensing Requirements for Proper Coverage

Las Vegas STR licensing requires proof of insurance that covers short-term rental operations. Your standard homeowners policy doesn't satisfy this requirement. The licensing office needs to see policy language or endorsements specifically covering STR use.

Some property owners try to get licensed using homeowners policies, hoping no one notices the coverage inadequacy. This creates multiple problems: you're not properly insured for your actual operations, and if the licensing office discovers the coverage mismatch, your license can be revoked for failing to maintain required insurance.

What Happens When You File Claims

The real problems emerge when you need to file a claim. A guest causes significant property damage, and you file with your homeowners carrier expecting coverage. The insurance company investigates, discovers you've been operating an STR, and denies the claim based on policy exclusions.

Now you're stuck with thousands in property damage costs and no insurance coverage. Worse, the insurance company might cancel your policy entirely for material misrepresentation—operating a business activity without disclosing it. This creates a cancellation record that makes obtaining future coverage more difficult and expensive.

Don't risk operating with inadequate insurance hoping you'll never need to file a claim. The first serious incident will cost more than years of proper STR insurance premiums.

STR-Specific Insurance Options and Providers

Several insurance companies specialize in short-term rental coverage with policies designed specifically for vacation rental operations. These providers understand STR risks and price their policies appropriately while providing coverage that actually works when you need it.

Proper Insurance

Proper is one of the most well-known STR insurance providers with policies specifically designed for vacation rentals. Their coverage includes liability protection, property damage, theft, loss of income, and other STR-specific needs.

Proper policies typically cost $1,500-2,500 annually depending on property value, location, coverage limits, and claims history. Their policies are admitted in most states including Nevada, which means they're backed by state insurance guarantee funds if the company fails.

The application process is straightforward and can be completed online. You provide property details, rental history, coverage preferences, and receive quotes quickly. Proper offers flexible coverage options that let you customize policies to your specific needs and budget.

Steadily

Steadily focuses on landlord and rental property insurance, including short-term rental coverage. Their STR policies provide liability protection, property coverage, and rent loss coverage designed for vacation rental operations.

Steadily pricing runs similar to Proper—typically $1,500-2,500 annually for most Las Vegas properties. They offer instant online quotes and fast policy issuance, which helps when you need coverage quickly for licensing or to start accepting bookings.

One advantage of Steadily is their flexible policy structures that can cover single properties or portfolios of multiple rentals under unified coverage. If you own or plan to acquire multiple STR properties, portfolio policies from Steadily can provide coverage at lower per-property costs.

CBIZ

CBIZ is a larger insurance brokerage that offers specialized programs for short-term rentals. Their STR coverage includes comprehensive liability, property damage, business interruption, and specialized coverages for pools, hot tubs, and other amenities common in vacation rentals.

CBIZ pricing tends to run slightly higher—$2,000-3,000 annually—but their policies often include higher coverage limits and more comprehensive protection. They're particularly strong for higher-value properties where standard STR policies might not provide adequate limits.

Working with CBIZ typically involves more personalized service through an agent rather than purely online quoting. This can be beneficial for complex situations or properties with unique insurance needs that don't fit standard STR policy templates.

Other STR Insurance Providers

Several other companies offer STR coverage including Foremost, Farmers, and various surplus lines carriers. Coverage and pricing vary widely, so shopping multiple quotes is worthwhile.

Some traditional insurance companies are adding STR coverage options to existing policies through endorsements rather than separate dedicated policies. These endorsements can work but require careful review to ensure they actually provide comprehensive coverage for your operations. Our property management strategies guide discusses insurance coordination as part of overall operational planning.

Cost Factors That Affect Premiums

Several factors influence what you'll pay for STR insurance:

Property value - Higher-value properties cost more to insure because potential loss severity is greater. A $500,000 property will have lower premiums than a $1,500,000 property.

Location - Properties in areas with higher crime rates, natural disaster risks, or claims history face higher premiums. Las Vegas properties near the Strip or in higher-traffic tourist areas might cost more than properties in quieter suburban neighborhoods.

Pool and amenities - Properties with pools, hot tubs, trampolines, or other attractive nuisances cost more to insure due to increased liability exposure. These features require additional coverage and drive premiums higher.

Claims history - Previous claims on the property or your personal claims history affect pricing. Clean claims histories result in lower premiums while frequent claims lead to higher costs or coverage denials.

Coverage limits - Higher liability limits and lower deductibles increase premiums. Choosing $2M liability instead of $1M adds cost but provides more protection.

Liability Coverage Recommendations

Liability coverage protects you when guests or third parties are injured at your property or you're accused of causing harm through your rental operations. This is arguably the most important coverage component because liability claims can reach catastrophic levels.

Why $1M Minimum Coverage Is Essential

Most STR insurance providers offer liability coverage starting at $1 million. This should be considered the absolute minimum for any vacation rental operation. Medical costs, legal defense expenses, and damages for serious injuries easily reach six figures, and catastrophic injuries can exceed $1 million.

A guest slips on wet tile around your pool, suffers serious head trauma, and requires extensive medical care plus ongoing therapy. Medical costs alone might reach $200,000-500,000. If the guest sues claiming inadequate safety measures, legal defense costs add another $50,000-100,000 even if you win. If you lose, judgment could reach $1 million or more.

Without adequate liability coverage, these costs come from your personal assets. Your home, savings, future earnings—all of it is at risk when liability claims exceed your coverage limits.

Why $2M Coverage Provides Better Protection

While $1 million is the minimum, $2 million coverage provides substantially better protection with relatively modest premium increases. The jump from $1M to $2M liability typically adds only $200-400 annually to premiums—a small cost for doubling your protection.

$2 million coverage gives you more buffer against worst-case scenarios. It also demonstrates to guests, neighbors, and licensing authorities that you're taking safety and liability seriously. Some management companies require properties to carry $2M liability as a condition of taking them into management.

For properties with pools, hot tubs, or other high-risk amenities, $2 million liability coverage should be considered mandatory rather than optional. The increased risk justifies the additional premium cost many times over.

Umbrella Policy Coordination

Some property owners add personal umbrella policies on top of their STR liability coverage for additional protection. Umbrella policies provide excess liability coverage that kicks in when underlying policies are exhausted.

A $1 million STR policy plus a $2 million personal umbrella gives you $3 million total liability protection. Umbrella policies are relatively inexpensive—often $200-400 annually for $1-2 million coverage—because they only pay when underlying coverage is completely exhausted.

Coordinate umbrella policies carefully with your STR insurance to ensure the umbrella actually covers your rental operations. Some umbrella policies exclude business activities just like standard homeowners policies. Verify with your umbrella carrier that STR operations are covered before counting on that additional protection.

What Liability Coverage Actually Covers

STR liability coverage typically includes:

Bodily injury - Medical costs, lost wages, pain and suffering, and other damages when guests or others are physically injured at your property.

Property damage - Damage you or your property causes to others' property, such as a fire spreading to neighboring homes.

Legal defense - Attorney fees, court costs, expert witness fees, and other legal expenses whether claims are legitimate or frivolous.

Medical payments - Immediate medical expense coverage (typically $5,000-10,000) for injured guests regardless of fault, helping avoid larger claims.

Liability coverage generally excludes intentional acts, contractual liability, and business operations beyond basic property rental. Read your policy carefully to understand exactly what's covered and what exclusions apply.

Property Damage Coverage for Guest-Caused Damage

Guest-caused property damage is one of the most common insurance claims for STR operators. Comprehensive property damage coverage protects your investment when guests cause damage beyond normal wear and tear.

What Property Damage Coverage Includes

STR property damage coverage typically protects the structure itself plus contents like furniture, appliances, electronics, linens, and decorative items. If guests damage drywall, break furniture, stain carpets, or cause other physical damage, your policy covers repair or replacement costs.

Coverage usually works on an actual cash value or replacement cost basis. Actual cash value pays the depreciated value of damaged items, while replacement cost pays to replace items with new equivalents. Replacement cost coverage costs more but provides better protection since you're not left short when replacing damaged items.

Most policies include dwelling coverage for the structure and contents coverage for everything inside. Contents coverage limits typically range from $25,000-100,000 depending on how furnished your property is and the value of furnishings.

Deductibles and How They Work

Property damage claims are subject to deductibles—the amount you pay before insurance coverage kicks in. Common deductibles range from $1,000-5,000, with lower deductibles resulting in higher premiums.

If guests cause $3,000 in damage and your deductible is $1,000, insurance pays $2,000 and you pay $1,000. For damage under your deductible amount, you pay everything yourself and insurance doesn't get involved.

Higher deductibles make sense if you're willing to self-insure smaller damages in exchange for lower premiums. Lower deductibles make sense if you want insurance to cover more claims but are willing to pay higher premiums for that coverage.

Security Deposits vs. Insurance Coverage

Many STR operators collect security deposits from guests to cover potential damage. Platform host protection programs like Airbnb's AirCover also provide some damage coverage. These mechanisms supplement insurance but don't replace it.

Security deposits typically max out at $500-1,000 and might not be collected on every booking depending on platform and guest factors. This covers minor damages but falls far short of serious damage claims.

Airbnb's AirCover provides up to $3 million property damage protection, but this coverage has limitations, exclusions, and claim processes that can be complicated. It's a nice backup but shouldn't be your primary damage protection strategy.

Dedicated STR insurance provides the most reliable property damage protection because it's a contractual coverage you pay for rather than a platform benefit that could change or be denied. Layer security deposits and platform protections on top of insurance for comprehensive damage protection.

Theft and Vandalism Coverage

Property damage policies also cover theft and vandalism—if guests or others steal items from your property or intentionally damage it. This protects against scenarios like guests taking expensive electronics or artwork, or vandals breaking windows and spray-painting walls.

Theft claims require documentation of what was stolen and its value. Maintain detailed inventory lists with photos and receipts for higher-value items in your property. This documentation becomes critical evidence when filing theft claims.

Loss of Income Coverage

Loss of income coverage (also called rent loss or business interruption coverage) protects your revenue when your property can't be rented due to covered damage. This coverage is often overlooked but can be critical for maintaining financial stability after major incidents.

How Loss of Income Coverage Works

If your property suffers covered damage that prevents you from renting it—like fire damage requiring extensive repairs—loss of income coverage pays your lost rental revenue during the repair period.

Coverage typically reimburses your average rental income based on recent booking history. If you average $3,000 per month in rental income and repairs take three months, loss of income coverage pays $9,000 to replace that lost revenue.

Most policies limit loss of income coverage to 6-12 months and cap total payments at a percentage of your dwelling coverage. Read your policy carefully to understand exactly how much loss of income protection you have.

When Loss of Income Coverage Applies

Loss of income coverage typically applies only when damage results from covered perils like fire, wind, hail, or vandalism. It generally doesn't cover losses from:

• Routine maintenance that requires taking the property offline

• Voluntary renovations or upgrades

• Loss of bookings due to bad reviews or market changes

• Regulatory issues that prevent rental operations

The key requirement is that the property must be physically damaged by a covered peril and that damage must prevent rental operations. If your property is physically fine but you can't rent due to other reasons, loss of income coverage doesn't apply.

Calculating Adequate Loss of Income Coverage

When setting up STR insurance, estimate your average monthly rental income and consider how long repairs might take for serious damage scenarios. A significant fire could require 6-12 months to fully repair and restore your property to rentable condition.

If you average $4,000 monthly in rental income, you need at least $24,000-48,000 in loss of income coverage to protect 6-12 months of revenue. Many policies default to lower amounts, so explicitly request adequate coverage based on your actual income and realistic repair timelines.

Loss of income coverage is relatively inexpensive—usually $100-300 annually for $25,000-50,000 coverage. Given the potential financial impact of extended rental interruptions, this coverage is nearly always worth including in your policy.

Coordinating Insurance with Management Companies

Professional STR management companies handle insurance coordination as part of their services, ensuring compliance with all licensing and operational requirements.

Insurance Requirements in Management Agreements

Most management companies require properties to carry specific minimum insurance coverage as a condition of taking them into management. These requirements typically include:

• $1-2 million liability coverage

• Property damage coverage adequate for the property value

• Management company listed as additional insured on liability policy

• Waiver of subrogation in favor of management company

These requirements protect the management company from liability exposure related to your property. If a guest sues over an injury, they'll likely name both you and the management company as defendants. Being listed as additional insured gives the management company coverage under your policy.

Certificate of Insurance Requirements

Management companies request certificates of insurance (COIs) showing your current coverage. These certificates verify you have required coverage amounts and that the management company is properly listed as additional insured.

COIs need to be updated annually when you renew your policy. Management companies track policy renewal dates and request updated certificates to ensure continuous coverage. Letting insurance lapse puts both you and the management company at risk and often results in immediate suspension of rental operations until coverage is restored.

How Management Companies Handle Claims

When damage occurs or liability claims arise, professional management companies coordinate the insurance claim process on your behalf. We document damage, gather evidence, communicate with insurance adjusters, and ensure claims are handled properly.

This coordination saves property owners significant time and stress. Instead of navigating complex claim processes yourself, your management company handles everything using their experience with similar claims. This typically results in faster claim resolution and higher settlement amounts.

Insurance Premium Deductibility

STR insurance premiums are fully deductible business expenses. The $1,500-3,000 you pay annually for proper coverage reduces your taxable income by that amount, effectively making the after-tax cost of insurance 25-35% lower depending on your tax bracket.

Management companies track insurance premiums as part of your overall expense accounting and include them in year-end documentation you need for tax filing. This is another area where professional management creates value—ensuring all deductible expenses are properly documented and categorized.

At 5 Star STR, we require all managed properties to carry dedicated STR insurance meeting our minimum coverage standards. We maintain relationships with STR insurance providers and can refer owners to appropriate coverage options during onboarding. We track policy renewals, maintain updated certificates of insurance, and coordinate claim handling when incidents occur.

Proper insurance is non-negotiable for successful STR operations. The coverage costs $1,500-3,000 annually but protects against losses that could reach hundreds of thousands. We've seen too many property owners try to operate with inadequate coverage, and we've seen the devastating consequences when claims occur without proper protection. Don't let inadequate insurance destroy your investment—get proper STR coverage before accepting your first booking and maintain it throughout your operations.

Bottom TLDR: Short-term rental insurance requirements in Las Vegas demand dedicated STR policies costing $1,500-3,000 annually from providers like Proper, Steadily, or CBIZ, as standard homeowners insurance excludes commercial rental activities and leaves property owners personally liable for guest injuries and property damage. Minimum coverage should include $1-2M liability protection, comprehensive property damage coverage with reasonable deductibles, and loss of income coverage for 6-12 months of rental revenue during extended repair periods. Professional management companies like 5 Star STR coordinate insurance compliance, maintain proper certificates, and handle claims processing as part of standard management services.