Insurance for Vacation Rental House

We own a vacation rental house in Kona, and when we bought insurance, the
agent told us that we needed to have a business policy. Such a policy is
much more expensive than an ordinary home policy. Our agent back in
California (with the same insurance company) was flabbergasted that we had
to have a business policy. Is this really a requirement in Hawaii? Or is
the agent there mistaken? Anyone else have a vacation rental house? Not
only is the business policy a lot more expensive, but because of it my
insurance company will not allow me to add the rental house to an overall
umbrella liability policy I have.

"Bob Oaks" <boboaks@pacbell.net> wrote in message
news:1057116907-sch@news.lava.net...
>
> We own a vacation rental house in Kona, and when we bought insurance, the
> agent told us that we needed to have a business policy. Such a policy is
> much more expensive than an ordinary home policy.

If you own this house to rent out, then you are operating
a business. Unless you are living there, also. I can under-
stand charging more for income property than residential
property.

Our agent back in
> California (with the same insurance company) was flabbergasted that we had
> to have a business policy. Is this really a requirement in Hawaii? Or is
> the agent there mistaken? Anyone else have a vacation rental house? Not
> only is the business policy a lot more expensive, but because of it my
> insurance company will not allow me to add the rental house to an overall
> umbrella liability policy I have.
>

Your commecial insurance is a business expense, deductible against the
income generated by the rental and any other income of the business. You
can't do that with a standard homeowner's policy (which is specifically for
owner-occupants). So, where's the problem?


"Bob Oaks" <boboaks@pacbell.net> wrote in message
news:1057116907-sch@news.lava.net...
>
> We own a vacation rental house in Kona, and when we bought insurance, the
> agent told us that we needed to have a business policy. Such a policy is
> much more expensive than an ordinary home policy. Our agent back in
> California (with the same insurance company) was flabbergasted that we had
> to have a business policy. Is this really a requirement in Hawaii? Or is
> the agent there mistaken? Anyone else have a vacation rental house? Not
> only is the business policy a lot more expensive, but because of it my
> insurance company will not allow me to add the rental house to an overall
> umbrella liability policy I have.
>

The problem (if there is one) is that I have owned many rental properties
over the year, but all in California and all long term (as opposed to
vacation) rental and have NEVER needed a business policy. My agent here was
very surprised that I would need one in Hawaii. It costs four times as much
for one thing. I'm just trying to determine if there is a law in Hawaii
that requires this kind of policy for a vacation rental or if my agent there
is just selling me a bill of goods. The other problem is that technically I
cannot add this house to my umbrella liability policy (like my other rentals
are), but the underwriter here finally descided to forget that rule since
they regard a single family rental house as very different from a
"business". Here in California there are at least three kinds of
policies--one for home owners, one for rental property, and one for a real
business (think store). Even the agent in Hawaii said I would not need a
business policy if the house there were long term rental.

"Mark Ichiyama" <mark@mc-carter.com> wrote in message
news:1057179907-sch@news.lava.net...
>
> Your commecial insurance is a business expense, deductible against the
> income generated by the rental and any other income of the business. You
> can't do that with a standard homeowner's policy (which is specifically
for
> owner-occupants). So, where's the problem?
>
>
> "Bob Oaks" <boboaks@pacbell.net> wrote in message
> news:1057116907-sch@news.lava.net...
> >
> > We own a vacation rental house in Kona, and when we bought insurance,
the
> > agent told us that we needed to have a business policy. Such a policy
is
> > much more expensive than an ordinary home policy. Our agent back in
> > California (with the same insurance company) was flabbergasted that we
had
> > to have a business policy. Is this really a requirement in Hawaii? Or
is
> > the agent there mistaken? Anyone else have a vacation rental house?
Not
> > only is the business policy a lot more expensive, but because of it my
> > insurance company will not allow me to add the rental house to an
overall
> > umbrella liability policy I have.
> >
>

Bob, as you've discovered, underwriting practices vary from state to state,
however if you have the same carrier for your CA properties as the Hawaii
parcel, your CA agent only had to make a phone call to the underwriting
department of the company to get the facts on policies in Hawaii.

"Bob Oaks" <boboaks@pacbell.net> wrote in message
news:1057224009-sch@news.lava.net...
>
> The problem (if there is one) is that I have owned many rental properties
> over the year, but all in California and all long term (as opposed to
> vacation) rental and have NEVER needed a business policy. My agent here
was
> very surprised that I would need one in Hawaii. It costs four times as
much
> for one thing. I'm just trying to determine if there is a law in Hawaii
> that requires this kind of policy for a vacation rental or if my agent
there
> is just selling me a bill of goods. The other problem is that technically
I
> cannot add this house to my umbrella liability policy (like my other
rentals
> are), but the underwriter here finally descided to forget that rule since
> they regard a single family rental house as very different from a
> "business". Here in California there are at least three kinds of
> policies--one for home owners, one for rental property, and one for a real
> business (think store). Even the agent in Hawaii said I would not need a
> business policy if the house there were long term rental.
>
> "Mark Ichiyama" <mark@mc-carter.com> wrote in message
> news:1057179907-sch@news.lava.net...
> >
> > Your commecial insurance is a business expense, deductible against the
> > income generated by the rental and any other income of the business.
You
> > can't do that with a standard homeowner's policy (which is specifically
> for
> > owner-occupants). So, where's the problem?
> >
> >
> > "Bob Oaks" <boboaks@pacbell.net> wrote in message
> > news:1057116907-sch@news.lava.net...
> > >
> > > We own a vacation rental house in Kona, and when we bought insurance,
> the
> > > agent told us that we needed to have a business policy. Such a
policy
> is
> > > much more expensive than an ordinary home policy. Our agent back in
> > > California (with the same insurance company) was flabbergasted that
we
> had
> > > to have a business policy. Is this really a requirement in Hawaii?
Or
> is
> > > the agent there mistaken? Anyone else have a vacation rental house?
> Not
> > > only is the business policy a lot more expensive, but because of it
my
> > > insurance company will not allow me to add the rental house to an
> overall
> > > umbrella liability policy I have.
> > >
> >
>

You're absolutely right, Mark. There are different practices from state to
state, and I have had my CA agent call the HI agent (acutally, as in most
cases, it's not agent to agent, but assistant to assistant--the seem to know
more than the agents themselves--but I'm still not clear as to whether I'm
facing a company (in this case Statefarm) or a state requirement that I have
a business policy on my rental policy. I'm trying to find someone who has
vacation rental property in HI and find out what kind of policy he/she has
(or someone who knows HI insurance laws). Previously I owned a couple of
vacation rental condos (as opposed to a house) and we didn't have to have a
business policy for that. But a condo is obviously different from a house,
and it was a different agent. Also, as concerns your statement that the
insurance is deductable against the income (below), that is also true, but
it is against my personal income. I do not have a "business", and do not
file taxes for that business. My rental property is all part of my personal
tax return, though business expenses affect it.

"Mark Ichiyama" <mark@mc-carter.com> wrote in message
news:1057292404-sch@news.lava.net...
>
> Bob, as you've discovered, underwriting practices vary from state to
state,
> however if you have the same carrier for your CA properties as the Hawaii
> parcel, your CA agent only had to make a phone call to the underwriting
> department of the company to get the facts on policies in Hawaii.
>
> "Bob Oaks" <boboaks@pacbell.net> wrote in message
> news:1057224009-sch@news.lava.net...
> >
> > The problem (if there is one) is that I have owned many rental
properties
> > over the year, but all in California and all long term (as opposed to
> > vacation) rental and have NEVER needed a business policy. My agent here
> was
> > very surprised that I would need one in Hawaii. It costs four times as
> much
> > for one thing. I'm just trying to determine if there is a law in Hawaii
> > that requires this kind of policy for a vacation rental or if my agent
> there
> > is just selling me a bill of goods. The other problem is that
technically
> I
> > cannot add this house to my umbrella liability policy (like my other
> rentals
> > are), but the underwriter here finally descided to forget that rule
since
> > they regard a single family rental house as very different from a
> > "business". Here in California there are at least three kinds of
> > policies--one for home owners, one for rental property, and one for a
real
> > business (think store). Even the agent in Hawaii said I would not need
a
> > business policy if the house there were long term rental.
> >
> > "Mark Ichiyama" <mark@mc-carter.com> wrote in message
> > news:1057179907-sch@news.lava.net...
> > >
> > > Your commecial insurance is a business expense, deductible against
the
> > > income generated by the rental and any other income of the business.
> You
> > > can't do that with a standard homeowner's policy (which is
specifically
> > for
> > > owner-occupants). So, where's the problem?
> > >
> > >
> > > "Bob Oaks" <boboaks@pacbell.net> wrote in message
> > > news:1057116907-sch@news.lava.net...
> > > >
> > > > We own a vacation rental house in Kona, and when we bought
insurance,
> > the
> > > > agent told us that we needed to have a business policy. Such a
> policy
> > is
> > > > much more expensive than an ordinary home policy. Our agent back
in
> > > > California (with the same insurance company) was flabbergasted that
> we
> > had
> > > > to have a business policy. Is this really a requirement in Hawaii?
> Or
> > is
> > > > the agent there mistaken? Anyone else have a vacation rental
house?
> > Not
> > > > only is the business policy a lot more expensive, but because of it
> my
> > > > insurance company will not allow me to add the rental house to an
> > overall
> > > > umbrella liability policy I have.
> > > >
> > >
> >
>

Bob Oaks wrote:

> You're absolutely right, Mark. There are different practices from state to
> state, and I have had my CA agent call the HI agent (acutally, as in most
> cases, it's not agent to agent, but assistant to assistant--the seem to know
> more than the agents themselves--but I'm still not clear as to whether I'm
> facing a company (in this case Statefarm) or a state requirement that I have
> a business policy on my rental policy. I'm trying to find someone who has
> vacation rental property in HI and find out what kind of policy he/she has
> (or someone who knows HI insurance laws).

We had a vacation rental house on Kaua`i -- insured via a regular
homeowners' policy, plus hurricane insurance. We opted _not_ to
use State Farm or Allstate, and went with a local multi-company
agency. Nothing special about the policy or the premiums; standard
liability, etc., with rates lower than what we were paying on our
California house at the same time.

-- auntie maria