Insurance for Renting a Timeshare

[steve0128]

Can anyone recommend an insurance company that issues policies to protect a timeshare owner when they rent to a third party? I’m looking for protection against major damage caused by renters and most specifically against liability claims.

Renting a timeshare is considered a “business transaction”. Therefore, any claims resulting from the rental will not be covered under a homeowners or umbrella policy since they exclude business transactions. So, if a renter has a substantial liability claim their attorney will sue the resort and most likely counter sue the “owner” of that week. Also, if the renter causes major damage this will not be covered under a homeowners policy.

I will be contacting my insurance agent for pricing on a commercial (business liability) coverage policy but any suggestions that Tuggers can provide would be appreciated. I’m not looking for typical vacation property coverage since the value of a timeshare is minor compared to a wholly owned condominium or property.

Thanks

 

[VacationForever]

The only thing that I can think of professional and general liability insurance, since as you have put it, it is a business transaction.

 

[DeniseM]

There is a company that sells exactly the kind of insurance you are looking for, but it is so expensive, and this kind of damage is so rare, that I don't think it is worth it. As I recall, it was like $50-70 per rental.

I can tell you from my many years on TUG, that it's extremely rare to have renters do this kind of intentional damage. Maybe an occasional accident, but not the kind of thing you are talking about. Also - most resorts require the guest to run their own credit card at check-in, and any incidentals or damages would go on the guest's credit card - not to you.

One thing you can do is monitor the age of the renters and avoid the spring break crowd.

I sometimes get this offer from parents: "We would like to rent your timeshare for our son and his 8 best friends who are all graduating from college in June." That is a big no thank you....

 

[steve0128]

Good point about screening renters properly since it would practically eliminate claims caused by intentional damage. The more important issue here is the unintentional accidents. Let’s say a renter is careless while cooking or ironing and causes a fire. The fire is contained to your one unit but adjacent units have partial fire damage and most likely have smoke and water damage. So you could end up having multiple claims that could easily total in the $10-$100k range. Lets take another example. You rent to a family and the parents aren’t watching their children properly around the pool. One of the kids dives into the shallow end or trips and falls and hits their head on the concrete edging of the pool. Because of this accident the child is seriously injured and now needs lifetime medical care that will cost in the millions of dollars. Iv’e been to a lot of resorts and seen many careless parents so this type of risk, although unlikely, is certainly a possibility.

I looked over all the paperwork I received when I purchased my HGVC timeshare and I couldn’t find anything about insurance coverage. Obviously, the resort has a master insurance policy but who knows what it actually covers and the policy limits. I’m going to request a copy of it because I don’t want to assume that I have no risk exposure when renting. I’ll post an update after doing some more research.

There is a company that sells exactly the kind of insurance you are looking for, but it is so expensive, and this kind of damage is so rare, that I don't think it is worth it. As I recall, it was like $50-70 per rental.

I can tell you from my many years on TUG, that it's extremely rare to have renters do this kind of intentional damage. Maybe an occasional accident, but not the kind of thing you are talking about. Also - most resorts require the guest to run their own credit card at check-in, and any incidentals or damages would go on the guest's credit card - not to you.

One thing you can do is monitor the age of the renters and avoid the spring break crowd.

I sometimes get this offer from parents: "We would like to rent your timeshare for our son and his 8 best friends who are all graduating from college in June." That is a big no thank you....

 

[DeniseM]

Again - damages to a timeshare rentals are extremely rare.

One of the kids dives into the shallow end or trips and falls and hits their head on the concrete edging of the pool. Because of this accident the child is seriously injured and now needs lifetime medical care that will cost in the millions of dollars. Iv’e been to a lot of resorts and seen many careless parents so this type of risk, although unlikely, is certainly a possibility.

This is a completely different scenario from someone damaging their unit and the resort charging you for the damages, and would require liability insurance.

Unless you are going into the timeshare rental business, insuring your rentals is probably over-kill.

 

[Centurion]

I would handle this in a separate rental deposit that you take from your renter at the time of booking. The deposit is fully refundable upon check out assuming no damage is done. This is a deterrent and I have never had any issues with someone renting the timeshare paying a small deposit of a fee hundred dollars. You should also put verbiage in your rental agreement that protects you above and beyond the damage deposit if the damage by the renter exceeds your deposit.

 

[Saintsfanfl]

Or just build it into the price of the rental and be done with it...

The fire example would be covered by the resort or management insurance. Resort management or their insurance is never going to go after an owner for this kind of damage. As an owner the resort insurance really is your own insurance so an additional policy for damages would really be a waste of money.

Anyone can be sued for anything so it's prudent to carry insurance to protect assets but more importantly is what entity is liable. If limiting liability for business transactions is important then the first step is to do business behind an entity and not in your personal name. To me doing business as an entity would solve the liability risk and is cheaper than getting an insurance policy. If this entity doesn't carry assets worth protecting then it isn't worth it to pay for insurance, especially in this case where the risk of a lawsuit is extremely low.

 

[DeniseM]

Security deposits are not the norm with timeshare rentals - adding a security deposit will eliminate many potential renters.

 

[Saintsfanfl]

Security deposits are not the norm with timeshare rentals - adding a security deposit will eliminate many potential renters.

Agreed. It's bad enough having to pay upfront without the ability to cancel.