Why standard policies fall short?
Most existing home policies are designed for personal use and exclude commercial activity.
“Standard home insurance policies typically exclude coverage for business activities, including short-term rentals or paying guests,” said Pankaj Verma, Chief Technical Officer (Underwriting & Products), Zurich Kotak General Insurance Company.
He added that fire insurance policies still apply to guest houses, but broader protection is limited.
Dilip Baba, Head – Commercial & Speciality Underwriting, Go Digit General Insurance, pointed out that renting is treated as commercial usage and requires a different policy.
“Risks can be covered under commercial property policies, which offer protection for property, theft, third-party liability, and even employee-related risks,” he said.
Disclosure and exclusions
Experts emphasise that homeowners must inform insurers about rental activity to avoid disputes.
“Failure to do so could lead to denial of claims,” said Ashwini Dubey, Head of Home Insurance, Policybazaar.
He noted that exclusions typically include poor upkeep, extended vacancy, or theft by a guest without forced entry. Liability claims from guest injuries are also not covered under standard plans.
Emergence of specialised products
Insurers are slowly adapting. Dubey said some companies now provide “homestay” covers, with liability for guest injuries, property damage, and loss-of-rent protection.
Baba added that short-duration commercial covers are available for owners who rent properties only seasonally.
Verma said demand is pushing insurers to innovate further.
“Some insurers in India now offer custom policies specifically designed for homestays or short-term rental properties,” he explained. He also noted rising interest in embedded protection directly offered by listing platforms, mirroring global trends.
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Travel shifts driving demand
The insurance push comes as short-term rentals move into the mainstream of Indian travel.
“At ELIVAAS, we’ve seen supply and demand grow by over 30% annually,” said Ritwik Khare, Founder & CEO, ELIVAAS. He added that platforms now help hosts explore coverage options, making it easier to manage risks while tapping into rental demand.
Awareness gap remains
Despite the growth, many property owners are still unaware of the risks.
“Most assume their standard home insurance policy will automatically cover guest stays, but in reality, these policies typically exclude commercial or rental activity,” said Caroline Mulliez, CEO, The Blue Kite.
She expects bundled insurance through property management firms to play a key role in bridging this gap.
Outlook
Industry estimates suggest India’s vacation rental market could surpass $2.5 billion by 2025. As demand rises, experts say customised insurance will become central to ensuring both property owners and guests are adequately protected.
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