Direct bookings remain a strong alternative to rentals through platforms like Airbnb. Whereas over 51% of bookings come from OTAs, 23% of guests use hotel websites and apps. They come directly to your online resource and book a stay without any mediators. No one pays additional charges or faces other limitations. You set the rules.
However, when it comes to direct bookings, the risks are also higher. Left without OTAs’ host damage protection and payment fraud prevention, you become more vulnerable. That’s why direct booking rentals require a special type of insurance that can protect hosts from property damage and other mishaps.
Learn what rental insurance is suitable for direct bookings and what terms to look for in our post.
What to expect when choosing direct bookings over OTAs
Many guests choose direct bookings for a lower price and other bonuses like a referral program. 70% of guests prefer booking through an OTA if the price is identical to the hotel’s website. That’s why you must carefully plan how to get direct bookings before starting rentals and consider lowering costs. Fortunately, a larger margin allows you to offer more attractive pricing than OTAs, keeping higher profitability and competitive advantage.
Here are some other consequences of renting property directly, abandoning OTAs, both good and bad:
• You must prevent any kind of fraud
• You have no one to request a refund for property damage
• You don’t pay a 10-25% OTA commission
• You can generate more profit
• You must put more effort into marketing
• You have more administrative tasks like booking management and payments
• You have more control over your brand and offering
• You build stronger customer relationships
• You may have lower visibility in the short-term
Direct bookings have several considerable advantages. They give you more freedom, ensure a higher return on investment, and allow you to build a unique brand. These advantages are strong enough to outweigh the flaws, especially if you get reliable insurance. Proper short-term rental insurance can make up for the absence of damage protection provided by OTAs. Are you considering expansion? Read about 10 great tips on managing direct booking listings remotely.
Why direct bookings need specialized insurance
If you have a direct booking website or a custom app, there is more uncertainty and risks to handle. Even though OTAs take hefty charges and considerably limit hosts, they do offer some level of protection like Airbnb host guarantee. With direct bookings, it’s your job to protect property from bad guests and the consequences of letting them in.
Weaker guest screening
If you get basic insurance for direct bookings and don’t check your potential guests, you will likely get in trouble. Anyone booking your property through the website can enter the place and do whatever they want. That’s why you need a specialized insurance plan that covers different types of damage and, preferably, get a tool for guest screening.
Less official communication
OTAs encourage users to communicate and make payments through their platforms. With direct bookings, guests may book properties using your website, Instagram, email, or another channel. The lack of a single system messes up records and makes you unarmed in case of rental issues or refunds.
Services like Truvi support guest screening in addition to property damage insurance to verify people. You can securely store critical information and use it to handle claims and protect yourself in disputes.
Higher risk of cancellations and refunds
Since most OTAs punish guests for late cancellations and have strict refund policies, you lose this barrier when doing rentals directly. That’s why you must develop your own policies and communicate them to guests. It’s also crucial to choose an insurance provider that supports damage waivers and deposits to keep people accountable for their actions.
No protection against property damage
When you rent a property directly, bypassing Airbnb, Vrbo, and other OTA platforms, you are left without host damage protection. Guests usually feel less responsibility since such rentals look less official and are not regulated by OTAs. As a result, people may behave carelessly and cause severe damage, expecting no consequences. A profound short-term rental insurance that holds guests accountable for their actions and provides extensive coverage is the only way to protect your place and budget.
Finally, decent insurance can offer you more than any OTA would. You will get higher protection with more types of damage covered. Providers like Truvi also offer guest screening as a part of the offering. Besides, the claim submission and resolution process is also much faster and more likely to succeed with a third-party insurance provider.
Is using homeowners’ insurance an option?
A standard homeowners insurance is better than nothing, but it’s not adapted to short-term rentals. Homeowners insurance is meant for owner-occupied homes. It can cover your needs if you live in that property and use it as a primary residence. Most companies offering homeowners insurance directly state their products are not suitable for short-term rentals.
Why? First, as we have already mentioned, short-term rentals cause more damage than regular living and, therefore, require stronger insurance. Second, standard homeowners insurance doesn’t cover what you need to be covered. Most insurers protect you from fire, hurricanes, lightning, or other disasters and personal liability, not accidental guest damage.
Summing up, no, homeowners insurance is not the best option for direct bookings. Paying for vacation rental insurance is worth it. Designed specifically for short-term rentals, it has measures to protect STR property owners.
Insurance for direct booking essentials
Now, let’s move to choosing direct booking insurance. Many providers offer vacation rental protection, but not all have decent coverage. Check out some options of the best insurance for short-term rentals here.
When considering direct booking insurance, check whether it covers accidental and malicious damage and has a quick resolution process. More about these and other essentials below.
Sufficient insurance coverage
Even though it may seem like you will never need hundreds of thousands of coverage, life happens. It’s better to cooperate with an insurance provider that offers enough coverage to pay for all types of damage, even the most severe. Besides, some cities have regulatory requirements regarding the minimum amount of liability insurance coverage.
So, make sure to check your local regulations and learn whether there are any limitations regarding insurance for direct bookings. It will save you from penalties and help choose the right policy from the start. You may not be able to get rental permission without sufficient insurance coverage, so the sum matters.
Accidental and malicious damage
While homeowners insurance protects you from natural disasters, direct booking insurance must be adapted for short-term stays. When new people enter your property every several days, the risk of accidental and malicious damage skyrockets. They may spill coffee on your couch, break a chair, or burn something. Such damage is usually accidental, but who cares if you must pay for it?
When minor expenses become repetitive and build up, it results in noticeable financial losses. Getting direct booking insurance that covers such types of damage can save you money. You can report the damage and receive money to fix everything.
Note. You can combine standard homeowners insurance with STR insurance to cover different types of damage, both force majeure events and guest damage.
Quick resolution process
It may seem like a minor detail, but it’s not. Believe us, you wouldn’t want to wait months for an insurer to handle your request like it often happens with Airbnb. Choose services that provide a quick response, preferably in several days. It should also be easy to report damage without hundreds of steps and lots of evidence required. This way, when something happens, you can take an image of a damaged item, instantly report it, and get your well-deserved money in a few days. It allows you to avoid prolonged vacancy periods caused by waiting for funds to fix your property or paying for the damage out of your pocket.
Some providers also offer liability and loss of income coverage. These are great add-ons to the above-listed essentials. With liability coverage, you have protection when guests get injured in your property, claim it’s your fault, and request you to pay the bills. The loss of income coverage means you will receive financial support if your property gets severely damaged and you cannot host guests for an extended period. An insurer covers the income you lose because of the standstill.
Additional ways to protect your short-term rentals
Specialized insurance is the basis for successful direct rentals. So, finding a fitting provider is already half the battle. The other half is being more careful about who you invite into your property and making them more accountable. Here are some tools and tips to do it.
Implement guest screening
When you move to direct rentals from under the wing of OTAs, you have no guest screening and reviews to rely on. That’s why you must implement guest screening yourself. It helps manage risks and sieve out fraudsters and people with bad reputations. Besides, verified guests are less likely to break or steal something from your property, making direct bookings more secure. When you use Truvi services for damage protection, guest screening is included. Or you can also get guest screening as a separate service.
Sign a short-term rental agreement
Ask guests to sign a short-term rental agreement digitally before arrival or when they come to your place before handing them keys. This agreement must include the terms of stay, check-in/out times, guest limits, liabilities, and responsibility for property damage or breaking the rules (e.g., throwing a party). SignWell and HelloSign are handy tools for signing and managing documents online. Find more details on what to include in a short-term rental agreement.
Collect a security deposit or waiver
Deposits make guests feel more responsible for their behaviors. They realize that causing some damage will cost them money and, vice versa, being nice saves their funds. With direct bookings, you can decide the deposit sum on your own and change it anytime.
Damage waivers have slightly different terms than deposits but are also a great way to protect your property. You can collect a set amount from guests to waive the cost of damage from them if something happens. It makes guests feel more secure during their stay and allows hosts to accumulate an emergency fund.
Ask cleaners to check and report damage
Professional cleaners specializing in short-term rentals not only clean your place but also ensure it’s okay each time guests check out. They can take pictures of any issues to help you track the condition of your property and quickly react if damage happens. You will have photo proof to file a dispute and get a refund.
How much does insurance for direct bookings cost?
We know you probably want specific numbers, but costs vary. The budget depends on the type of coverage since some providers may offer several policies to choose from. The more protection you want, the more you will pay for insurance.
Besides, the insurance cost for direct bookings depends on property type and value, location, frequency of rentals, and extras. You can contact several providers to check the offerings and understand what package meets your needs.
If you rent a property once in a while, you can get a policy that covers the days when you have guests. If you run a rental business, buying comprehensive insurance that protects your property all year round and is more reliable is better.
Truvi’s combo as an alternative solution for direct bookings
Truvi platform is a powerful alternative to standard insurance. Our policies combine STR damage protection services with essential extras like guest screening. We take responsibility for checking everyone who books your place. Our tools gather personal information about them and make sure you can trust this person. The screening process compensates for guest checks in OTA platforms and is actually more detailed and reliable.
With the Truvi property protection and guest screening combo, you can fully substitute the benefits of OTAs while keeping the pros of direct booking. Book a demo now to see how it works.
