The house hasn’t changed. So why has the risk?
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When a rental strategy changes overnight, insurance doesn’t always follow suit
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With more than 48 million rental housing units across the US and around one-third of American households renting their homes, the rental sector represents a huge and increasingly important part of the country’s property market.
However, for investors looking to carve a career out of this market, it’s not necessarily as simple as it may first appear, and, in order to ensure success, partnering with the right specialist program provider is a must.
In a recent interview with Insurance Business, Casey Carter, VP of risk management at REInsurePro, explained that one rental property isn’t the same as another, adding that occupancy type is a huge factor in underwriting risk. And it can sometimes be overlooked.
“Occupancy type is one of the most important underwriting factors because it directly impacts the frequency and severity of potential losses,” he said. “While the physical structure of a property may be the same, how it is occupied fundamentally changes the exposure.
REInsurePro is a national program manager with expertise in building specialty programs for niche property risks. Our flagship program for residential real estate investment properties is the largest and most comprehensive of its kind for tenant-occupied, renovation, and vacant properties up to 20 units. Our monthly reporting form provides flexibility for investors and simplified billing for agents. And our state-of-the-art technology platform simplifies the process of quoting, binding, and servicing these complex clients, with the excellent support for our agent clients.
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“The coverage gap often isn’t the building itself; it’s the disconnect between how the property is insured and how it’s actually being used”
Casey Carter,
REInsurePro
Published Sep 8, 2026
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“One of the most common mistakes agents make is assuming all rental properties fit into the same insurance category. Asking whether a property is a rental is as important as asking how it’s being rented”
Casey Carter,
REInsurePro
“With annual leases, tenants establish the property as their primary residence. They typically have a long-term interest in maintaining the property, become familiar with its systems and safety features, and create a more predictable risk profile. From an underwriting perspective, this is generally the most stable form of occupancy.”
As Carter told IB, monthly or mid-term rentals add yet another layer of uncertainty because occupants change more frequently. And while turnover is not as constant as in a short-term-rental environment, there are still more opportunities for losses related to vacancies, maintenance issues between occupancies, and varying tenant behaviors.
“Nightly or short-term rentals generally carry the highest level of occupancy-related risk,” Carter explained. “Frequent guest turnover means more individuals are accessing the property, there is less familiarity with the premises, and there are increased opportunities for slips and falls, accidental damage, water losses, or liability claims.
“Many underwriters and insurers often view short-term-rental properties as operating more like a hospitality business than a traditional rental property, but here at REInsurePro we have mastered the ability to insure different lengths of stay for our agents and their investor clients. Whether it is a long-term lease, short-term vacation rental, even our new program for rent-by-the-room exposure with as little as a weekly lease, we can assist with each risk they choose to take on under their rental portfolio.”
Whether a property is a rental is as important as how it’s being rented Ultimately, the way people occupy rental properties is changing. The US short-term vacation rental market was estimated at $72 billion in 2025 and is projected to reach $125.14 billion by 2033. Meanwhile, research into US Airbnb reservations found that stays of 28 nights or longer have become much more common than they were before the pandemic. With that in mind, insurance agents need to be mindful of the approach they take here – and remember the basics.
“One of the most common mistakes agents make is assuming all
rental properties fit into the same insurance category,” added Carter. “Asking whether a property is a rental is as important as asking how it’s being rented.
“Many investors today can use multiple rental strategies. A property could be rented on a long-term basis today, but let’s say the property becomes vacant during peak short-term-rental season and the owner shifts immediately into marketing it as such. If an agent only identifies the property as a rental without understanding the occupancy model, there is a significant risk of placing coverage that does not align with the actual exposure.”
Carter believes the best agents approach rental risks with a fact-finding mindset – because the goal is not simply determining if the property generates rental income. Instead, it’s understanding how that income is generated.
“The answers often dictate both the underwriting approach and the insurance solution,” he told IB.
Vacancy, turnover, furnishings Beyond property classifications, there’s a myriad of other unique underwriting considerations that come into play: Is the rental short, mid, or long term? Will the property be fully furnished or vacant? What will the level of guest turnover look like? Will it be rented to a single professional or a family? As Carter explained, it’s a bit of a minefield if you don’t have the best advisors on hand.
“Short- and mid-term rentals involve several underwriting considerations that generally do not exist in traditional long-term housing. Guest turnover is a significant factor because each new occupant introduces a new liability and property damage exposure. More frequent turnover can correlate with a higher likelihood of accidental losses and liability incidents.”
And furnished units create yet more exposure because owners are insuring not only the structure but also furnishings, appliances, and other contents provided for guest use. What’s more, this increases both the value at risk and the complexity of claims, which would need to be explicitly covered as well.
“Vacancy is another major consideration,” warned Carter. “Properties that sit unoccupied between guests can be more susceptible to theft, vandalism, water damage, fire, and delayed detection of losses. Underwriters often evaluate how frequently the property is monitored when vacant and dictate how long the property can be vacant before an endorsement to the location is needed, or a new vacant policy must be written in its place.
“Professional property management can be viewed favorably because it typically demonstrates a structured approach to guest screening, maintenance, inspections, and claims prevention. Well-managed properties often benefit from stronger risk controls than investor-owned properties that are managed remotely or informally.”
And with the typical US Airbnb host earning more than $15,500 in 2025, short-term rentals can represent significant income-generating assets for property owners. Importantly, changing how a property is occupied can also change the exposures associated with it. Airbnb’s own protection highlights the distinction, with its AirCover program including $1 million in host liability insurance and $3 million in host damage protection. However, the company explicitly states that its host damage protection is not an insurance policy. As Carter told IB, this reflects one of the most commonly overlooked coverage gaps.
“The most common coverage gaps arise when a property owner purchases insurance intended for owner-occupied homes or traditional long-term rentals but later begins using the property as a short- or mid-term rental. The physical property hasn’t changed, but the exposure has, and that’s where problems can occur.
“A major exposure that’s often less discussed is gaps in liability coverage. In a traditional rental, a tenant may occupy the property for years. In a short-term rental, dozens or even hundreds of different guests may enter the property annually. Every guest represents a new liability exposure. Slip-and-fall incidents, injuries involving stairs, decks, pools, hot tubs, fire pits, bicycles, docks, or other amenities can create claims scenarios that may not align with the intent of a standard landlord form.”
The coverage gap often isn’t the building itself Contents exposure is another common blind spot. Most short- and mid-term rentals are furnished. Owners often invest tens of thousands of dollars in furniture, electronics, decor, kitchen equipment, and amenities to attract guests. And standard policies may not adequately account for the value or business use of those contents.
“The coverage gap often isn’t the building itself; it’s the disconnect between how the property is insured and how it’s actually being used,” warned Carter. “A home rented to one family on a year-long lease presents a very different risk than a property welcoming 100 different guests a year. When occupancy changes but coverage doesn’t, that’s where investors can find themselves unexpectedly exposed.”
This really is where the power of specialization comes in. Specialty programs, such as the ones offered by REInsurePro, help align different coverage types with the property’s actual operation – rather than forcing an awkward and unconventional exposure into a mismatched policy.
“The most effective specialty programs are designed specifically around the realities of short- and mid-term rentals, including guest turnover, furnished accommodations, variable occupancy patterns, liability exposures, and rental income considerations,” Carter told IB. “This creates greater confidence that the coverage matches the risk profile being insured.
“Specialty programs also tend to provide underwriting expertise focused on this segment of the market. Rather than treating occupancy as an exception, these programs recognize it as the core exposure and evaluate risk accordingly. As the rental market continues to evolve, the insurance solution must evolve as well. Investors who work with knowledgeable agents and specialized programs are generally in a better position to protect their assets, manage liability, and support long-term portfolio growth.”
Looking ahead to what the future holds for this booming market, Carter told IB that the benefits far outweigh the challenges for investors. And in a sea of potential errors, the biggest mistake for investors lingers in their first step – assuming occupancy is just an operational detail. Because from an underwriting perspective, occupancy is often the real risk.
“Understanding who is using the property, how often they change, and how the property is managed is essential to securing the right coverage and protecting the investment for the long term,” added Carter.
The REInsurePro Story
REInsurePro’s residential real estate investment insurance program was developed to meet the needs of the investor and the agents serving their insurance needs. The program packages property and liability insurance for tenant-occupied, renovation, and vacant investment properties, with customized coverage options for each unique investor and portfolio.
Source: REInsurePro
Rental housing numbers
The US rental housing market is valued at approximately $1.91 trillion in 2026, rising from $1.85 trillion in 2025
There’s over 48 million rental housing units across the US
One-third of American households rent their homes
Source: Market Data Forecast, Congress, Brookings
