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You and your family are eagerly exploring the backyard of your vacation rental. You're so absorbed, you don't notice that your dog is chewing the living room rug to shreds. Who pays for the damage? Your homeowners or renters insurance may cover damages to a vacation home or hotel room that you, your family members or your pets cause.
What Does Home Insurance Cover?
Standard homeowners and renters policies include liability insurance, which covers injuries to visitors to your home. Liability insurance also covers injury to people or damage to property that you, your family or your pets accidentally cause outside your home. This coverage typically follows you anywhere in the world and pays your legal costs if the injured party sues you.
Homeowners or renters insurance should cover the rug Fido ate, but it won't cover all damages. For instance, if your daughter purposely spray-paints graffiti on the wall of the vacation rental, your insurance probably won't cover it. Liability insurance only protects against accidental damage, not intentional destruction.
Suppose you forget to lock the door of your rental cabin before going skiing. While you're out, a bear enters and ransacks the house. The insurance company may consider you negligent for failing to lock the door. Losses due to negligence typically aren't covered.
Should You File a Homeowners Insurance Claim to Pay for Damages?
When you file a homeowners or renters insurance claim, you must pay your deductible before the insurance company pays any damages. Depending on the extent of the damage, it may not be worth filing a claim. Suppose your dog destroyed a rug worth $400 and your deductible is $250. Your insurance will only cover $150 of the cost, so you might be better off paying for the rug yourself.
Filing multiple homeowners insurance claims can cause your premiums to rise. If you file too many claims, the insurance company might even cancel your policy. It's best to reserve homeowners insurance for major damage, such as a house fire, rather than using it for smaller losses.
You might not even need to file an insurance claim to pay for damage to a vacation rental. Vacation rentals often charge a security deposit intended to cover any damage you inflict. Some vacation rental owners also have insurance that covers damage renters cause. For example, Airbnb offers hosts up to $1 million in damage protection through its AirCover program.
Most hotels have strict policies that hold guests liable for damages (although they often absorb minor damages as a cost of doing business). Visit the hotel's website or call for details of its damages policy if an incident involving damage occurs. Many hotels request your credit card at check-in so they can charge it for any damages they discover after you check out.
Does Home Insurance Cover Temporary Relocation?
Alternative living expenses (ALE) coverage, which is part of homeowners and renters insurance, pays for you to live elsewhere if your home is declared uninhabitable due to a covered loss. However, ALE coverage doesn't apply if you damage your rental home or hotel so badly that it's uninhabitable. You still have a place to live; you can simply go home or find another rental or hotel.
What Does Travel Insurance Cover?
Will travel insurance protect you if you damage a vacation home or hotel? Travel insurance usually includes protection for trip cancellation or interruption, medical care, emergency evacuation and accidental death or dismemberment. It may reimburse the cost of your vacation rental or hotel if your trip is cut short, but it generally won't provide protection for damages.
Some credit cards offer travel protections if you use the card to pay for your trip. However, these usually cover baggage delay or loss, rental car damage, or trip cancellation or interruption, rather than protecting the property of the hotel or vacation rental landlord.
Make Sure You're Covered
Filing home insurance claims can raise your rates. So can having bad credit. Insurance carriers may check your credit-based insurance score to determine your premiums. Paying your bills on time and maintaining low balances on credit cards can help boost your credit score, which may save you money on homeowners insurance.
Before booking a vacation rental or a hotel, it's a good idea to contact your home or renters insurance company to see if your policy covers potential damage. You can also ask the rental landlord what coverage they have. Knowing you're protected against accidental damages makes it easier to relax and enjoy your trip.