Heather Bayer
Do you believe your vacation rental insurance has you fully protected? If you do, you might want to think again.

Heather Bayer
This is Insurance Week on SSTIR Crazy Month 2025. And we're going to uncover the hidden risks that could cost you everything. Join us as Nick Massey from Proper Insurance shares real life lessons from StayWise Rental's latest disaster, which is an unauthorized pool party that spiraled into a nightmare. Learn how to spot the gaps in your coverage, protect your properties, and avoid the mistakes that could bankrupt your business. If you're serious about staying ahead of risks, this is an episode you cannot afford to miss.

Heather Bayer
This is the Vacation Rental Success podcast, keeping you up-to-date with news, views, information, and resources on this rapidly changing short-term rental business. I'm your host, Heather Bayer, and with 25 years of experience in this industry, I'm making sure you know what's hot, what's not, what's new, and what will help make your business a success.

Heather Bayer
Well, hello and welcome to another episode of SSTIR Crazy Month 2025. This week, we're getting into one of the most critical topics for every vacation rental business, and that's insurance. I see Facebook posts every week from owners talking about the high cost of insurance premiums and even whether it's worth having it at all. And from a property manager standpoint, ensuring every one of your properties is insured sufficiently is an absolute must.

Heather Bayer
In my property management company, this was an annual review task to check on the policies that our owners held, and of course, to review our own coverage as a property management company. We got sued once and it wasn't pretty. And after that, nothing was left to chance.

Heather Bayer
So let's revisit our fictional property management company, StayWise Rentals, as they faced their worst nightmare when a guest's unauthorized pool party at their premium Beach Vista property led to significant property damage, reputational issues, and some very high costs. The guests actually booked through their direct website for "a quiet family weekend". And what happened was that at two o'clock in the morning, Sarah Chen's phone lit up with urgent messages. The security camera alerts were showing multiple cars at the property and people entering. There were neighbor complaints about noise and street parking. The property's smart water sensors detected some flooding, and then the guest, of course, refused to answer any calls or texts.

Heather Bayer
In the aftermath of all this, there was significant damage. There was a broken pool fence and gates. There looked to be some pretty bad damage to the pool itself. One of the Jacuzzi tubs in the house had overflowed and water had come through the ceiling to the main floor. Outdoor furniture was damaged and inside the hardwood floor had been badly scratched by furniture being dragged across it. And those were just the major issues. In the weeks and actually months afterwards, other issues arose, and there were more and more repairs and maintenance required.

Heather Bayer
Then came the insurance surprises. The policy excluded damage for events for over 12 people. There was no coverage for business loss, business income loss during the repairs. And then because it was a direct booking, there was no OTA protection at all. The financial impact was huge, $45,000 estimated in immediate repair costs. Two months of canceled bookings, lost income during the peak season. And then the credit card company sided with the guests who wanted to make a chargeback after they'd been evicted. They found policy gaps in their insurance. There was no event liability coverage, inadequate contents insurance, the missing business interruption protection, and no coverage for the guest chargebacks. And then the expanding problem, the owner of the property threatened to take legal action against them because of the rental to this particular group.

Heather Bayer
Other property owners then heard about it and they demanded some insurance reviews and similar coverage gaps were found in all of their properties. And then they got into issues with the local authorities who wanted to know where their permit was for the event that had been held. So there's a huge business impact here.

Heather Bayer
So to help unravel all of this and discuss the complexities of vacation rental insurance. We're joined today by Nick Massey from Proper Insurance. Nick knows this industry inside and out and knows how to safeguard your business from the unexpected. And nick is going to guide us through the most common coverage gaps, the high-risk scenarios and actionable strategies that every property manager needs to implement, whether you're managing a single property or an entire portfolio like StayWise Rentals.

Heather Bayer
So in this episode, you're going to learn the must-have insurance add-ons to protect your business, how to avoid common mistakes that could lead to costly claims like this one, and what StayWise Rentals could have done differently to prevent this disaster. So without further ado, let's move straight on over to this interview with Nick Massey.

Heather Bayer
So I am super happy to have with me today to talk about all these issues. Nick Massey from Proper Insurance. Nick, always an absolute pleasure to have you on the show.

Nick Massey
Always a pleasure to be part of it, Heather. Thanks for having me.

Heather Bayer
Well, you are my go-to expert on insurance. It was natural when we started talking about StayWise Rentals and the issues that they were having that you and Proper Insurance would be the place to go to get the answers. Because it's not just what's happening with StayWise Rentals. These issues could happen to absolutely anybody, any individual, any property management company. We want to cover off a lot in this episode. So let's kick off with... You know what the story is, is that the owners, Sarah and Mike, have been informed that there was an unauthorized... It's an unauthorized pool party, but who authorizes a pool party anyway? So this pool party happened, and they found out about it in the early hours of the morning, and there has been significant damage.

Heather Bayer
They've been able to assess the damage, and it looks like around about $45,000 in overall damage, which is immense for anybody to cope with. And of course, we'll talk about this, but to me, as a property manager, my first concern would be for the owner, because it's the owner that is having to face this. It's the owner's insurance. And I just wanted to clarify that at the very outset. How does this work with the owner and the property manager?

Nick Massey
Yeah. So It's a story that we hear all too often here at Proper, and it's actually an interface in risk management that there's a lot of confusion on who's responsible for what, whose insurance does this, whose insurance does that. And When there's a situation that happens at the physical property, it's the property owner. The property owner's insurance is the first one that's going to have to kick in and respond here, not just for the damage to the physical property, but also the loss of revenue component because we can't short-term rent the property now, and so how does our insurance...

Nick Massey
Question number one is, do we have the right insurance? Did we go through that exercise before we put the property online to make sure that we have a policy that's structured and designed specifically for the short-term rental exposure at the piece of real estate? Do we have property coverage? Do we have liability coverage? Then you run into all these other nuances of how does this work from a regulatory standpoint? How does this work from my property manager How are they responsible, if responsible at all, and what are ways to avoid this from happening?

Nick Massey
So effectively, the property owner is the one who's going to get the call from the property manager from StayWise here. I'm going to go, this happened, and you need to call your insurance company. And that's step number one here.

Heather Bayer
Yeah. And so I can imagine from... I've been a property owner. I had a number of properties, and to get that call would be huge with that amount of damage. From that property owner perspective, what would they have to do immediately to, I don't know, to instigate a claim? I think what I'm trying to say is, whose responsibility is it to say, Okay, this situation occurred, and who gets to deal with what? So I understand it's a property owner's insurance that is going to be taking the brunt of this. But from the property owner's perspective, they're sitting there saying, I gave you my property to look after responsibly.

Nick Massey
Yeah. So they would have to call the claims number on their policy or call their agent. That's the number that they have and do what's called a first notice of loss or FNOL, as it's called. That first notice of loss isn't prompting anything yet, because there needs to be some investigation. Now, in most cases, in a lot of cases with short-term rentals, especially when you use a property manager like StayWise, then you are more than likely a remote owner. You don't live nearby. Through the claims process, you'd want to provide the adjusters in that claims team who the boots on the ground contact is for scheduling meetings and on sites for photos, provide any documentation that you have. If you don't have any documentation as a property owner, then hopefully your property manager and their maintenance team, cleaning team has documented that very well and can provide that for an initial look on that FNOL, which would then, depending on the severity of the damage, may lead to not just an on-site field inspection, but in this case of a party, if they had punched holes on the walls or damaged fixtures like cabinets, countertops, walls, windows, doors, things like that, it may call for a structural inspection with an engineer as well.

Nick Massey
There is a process there of a couple of weeks, not just from a cleanup standpoint, but an investigative standpoint to make sure everything is known on what needs to be repaired at the property.

Heather Bayer
The owner, apparently, has checked with their insurance, and number one, they don't have any coverage for business interruption, business income loss. It was a direct booking through StayWise. StayWise did that booking directly, so they have no OTA protection. And there's a couple of exclusions on the policy. What exclusions are likely to jump in and impact them?

Nick Massey
Well, a couple of things. When being told here that they don't have business interruption coverage, it leads me to believe that they don't have a policy that's structured for short-term rentals. So there's a few glaring exclusions that pop up right away. The first one being a potential business activity exclusion. That means that by operating a business, an insurance form language is very direct in what that is. It's typically $2,000 a year or more in active revenue, and most vacation rentals make more than that. So that business activity exclusion can deny virtually any claim that happens at the property while it's advertised online, whether through an OTA or the Property Managers Direct website.

Nick Massey
You also have what's called a property entrustment or dishonesty exclusion that's common place in virtually all insurance. What that means is, is when you hand the keys over to somebody or you have a representative like your property manager who's handing the keys over, there is no coverage. It states very specifically that anyone to whom you entrust the property for, for any purpose, there's some middle jargon in there about owners of the property. And it says, Whether acting in a loan or in collusion, and causing theft or vandalism, there is no coverage. It is excluded. So this $45,000 loss, we have a lot of gaps in this policy right now that are going to drive the carrier and the adjusters to have to go through more than likely a denial on this claim in that situation.

Heather Bayer
Could that result in the owner making a legal claim against the property manager because they had not been informed of the type of insurance they should have?

Nick Massey
Not necessarily. The property manager should have their own business insurance policy, which carries professional liability or E&O which can respond to claims of mismanagement, but that's typically around improper advisement. It's not necessarily around, you contracted with us to manage your property. We did all of these checks, bam, bam, bam, bam, down the line. We allowed them to come and stay, and they ended up having a bunch of drinks and inviting the neighborhood over, which resulted in this party. And so legal course, against the property manager in this particular situation would be difficult as well as costly to the property owner, probably more in legal fees than the damage to the property in this situation.

Nick Massey
Where does it fall? When there's malicious damage, there is the civil side of this where the property owner can take legal action against those who actually damage their property. But recovery in that situation typically doesn't really happen. Folks who end up damaging properties like that typically don't have the financial means to cover that, but you could go the criminal route through civil matters. But this doesn't really fall under the category of mismanagement on the property manager where their E&O would come in.

Heather Bayer
Okay, this really begs a question of what should a property management do proactively to ensure that all their properties are insured correctly? And I know with my company, we didn't start this until we were probably about 12 years in and then realized that, yeah, we needed to know that our owners had coverage that covered them for the business activities. And from there on, we did an annual review it was part of our annual review, we would go to every owner and say, we need to see your insurance.

Nick Massey
Step number one, obviously, is as a management company to make sure you have the right insurance in place for your business. Your standard business insurance, general liability, property coverage, commercial auto, work comp, all of those different things. When we talk about short-term rentals, specifically in the management of those, there's a lot of companies out there who classify this as hotel management. So yeah, they'll sell you a policy, but when a claim happens, they'll probably deny it because it falls under that category that they don't cover.

Nick Massey
There's only a couple of companies out there that really do it. We do have a sister company that specializes in that to help StayWise navigate the complexities of the business insurance and make sure they have the right package in place for them to start. And then those policies grow with you as the business grows, as your sales increase, as your property as your employee count increases, etc.  And then proactively, what StayWise should be doing in any property manager, regardless of your size, if you manage five properties or 5,000 properties, you should have a contact, at least one, if not multiple, to assist your property owners in finding the right insurance.

Nick Massey
Proper is not the only game in town that does short-term rentals. And so finding a couple of those to put on the list and have the property owner make a decision on who they want to use for their home policy here. The big one is to make sure in your contract with the property owners that you have an insurance requirement. And the basics of that insurance requirement should state that the property owner carries property coverage for what they deem to be appropriate. So you need to go and find that. And $1 million in general liability coverage for the naming StayWise as an additional insured. And then from there, before StayWise puts a property online, they collect what's called a certificate of insurance or a COI. And that COI is a one-page document that has the carrier, the phone number, the policy number, the limit of liability insurance, which should say 1 million per occurrence, and then would show down on the bottom left-hand side of that page, the additional insured, which would be StayWise. Once StayWise has that, they can feel fairly confident that that homeowner has not only upheld their part of the owner contract with StayWise on what they need, but they also have insurance that's correct.

Nick Massey
The other thing that StayWise could add is that on that certificate of liability insurance or that COI, that in the description, it states that the description of operations is for a short-term vacation rental property. And then that way you have that official stamp from the carrier without having to read 100 pages of policy language to know that they're putting that on there saying they understand what they're covering here.

Heather Bayer
So what comes to mind here is I've been talking recently about co-hosting an Airbnb's new co-hosting network. And the new co-hosts are coming along. They're getting drawn into the Airbnb network. And I don't imagine that they are advising owners to get particular insurance because they're buying into the Koolade of Airbnb insurance. Can you just address that one? Because a lot of these co-hosts now are being told by the direct booking people that they shouldn't have all their eggs in one basket, and they should perhaps have a direct book website and begin to advertise outside of Airbnb, which opens them up to not having any coverage whatsoever under whatever the platform is offering.

Nick Massey
Yeah. In the US, specifically, there are certain licenses and paperwork that needs to be done to be a professional property manager that's getting paid a commission. It's a specific real estate license that needs to be had. Co-hosting is a way around that. I've always felt co-hosting is a great entry for folks who want to see if this is something that they can do, that they can make money from, are they good at it, get involved in the community short-term rental-wise as a co-host. But it doesn't hold the same business requirements as a more traditional property manager would. But it doesn't mean that you're without liability. It doesn't mean that you're not looked at like a professional property manager, and so you should still navigate the insurance the same way.

Nick Massey
You should still look to see how you need to be protected your sofa running your business. You're collecting money, you're advising clients, you're advising guests, you're doing check-ins and checkouts and cleanings, you're responsible for the hot tub, you're responsible for the bathtub, Where is the rugs and how are they set up and the furniture and are the bunk beds up to what they need to be on and on and on? It's still your responsibility. You should still be named as an additional insured on the insurance policy as a co-host because you're the one doing all of that communication.

Nick Massey
If a guest becomes injured at a property, their personal injury attorney will probably more than likely name you in the lawsuit as well. As far as the OTA protections, they're there, but I always advise everybody, pretend like they're not. What if Airbnb and Vrbo and these other OTAs didn't have that veil of insurance with every booking? Then what do we do? So we need to attack it like that. If they do respond, they respond, and that's great. But it's when they don't respond, that there's a problem.

Nick Massey
So even as a co-host, In StayWise's situation with their own website, they can look at a supplemental program to put in, where it's an additional layer of insurance per booking. A lot of times, those will come with not just a minimal amount of property damage caused by a guest, but they also come with some limited liability protections as well. They don't cover everything. They're going to have limitations around it, and we need to understand what those are.

Nick Massey
But they're there as an additional layer of protection, especially if the property owner didn't go out and secure the right type of coverage for their home. If we go back to the situation of this pool party, we have $45,000 in damage. If StayWise, that property owner has the wrong insurance as we've established, but maybe StayWise had a damage waiver program in place at a $20,000 limit for this home. Well, at least we'll get up to, hopefully $20,000 to help offset the cost here for the damage. That would be the responsibility of the co-host or the property manager. To go out and secure that type of supplemental protection.

Heather Bayer
Yeah, interesting. Let's go beyond pool parties. You obviously have many instances of other high-risk scenarios that property managers face. Can you tell us about a few of them, and then how property managers can actually prepare for the potential of these types of scenarios happening?

Nick Massey
Yeah. Every situation is different based on the types of amenities that the property is providing. For us, specifically here at Proper, we see that while only about 8 to 9% of our liability claims that are filed annually are pool or tub related, they are our number one settlement. They are very expensive when something does come up and happen.

Nick Massey
Now, other things that we see a lot is going to be things like dog bites. Dog bites equate for over a billion dollars in annual insurance settlement in the US every single year, and pet friendly properties are on the rise. If you're going to be a pet friendly property, especially as a property manager, and your property owner says we want to be pet friendly, then we need to have a focus on animal and pet liability and make sure it's not excluded. Ensure we have coverage if FIDO goes and bites a neighbor, and now we're faced with a large lawsuit.

Nick Massey
Waterfront properties or near water properties, you don't necessarily have to be Lakefront or front to have this risk. But we see a lot of these properties now with bicycles and canoes and kayaks and things like that. Those do pose an additional risk, as well as insurance consideration. We see a lot of companies out there, and they like to bury the language. It's the side of insurance, but recreational activity exclusions. And that can be problematic if we're offering or have recreational activities nearby that we might advertise And so what do we do? How do we become proactive in managing risk?

Nick Massey
I'm a big proponent of doing a safety program. Safety programs are out there to help provide checklists for the property to ensure you're not missing anything. You're checking all the boxes when you go through these amenities, post-day inspections of all of the equipment, waivers of liability, simply use at your own risk language and rental agreements with the guests. If you have a bicycle or bicycles, provide helmets. If you have canoes or kayaks, provide life jackets, eliminate unnecessary risk from the property. A good way, an easy way to do that is, what do the OTAs allow as a searchable item? If it's not a searchable with the OTA as an amenity, it probably shouldn't be at your property.

Nick Massey
If you look at the zip lines and diving boards and slides into pools or off docks into lakes or a pontoon boat or things like that, those aren't individually, you can't search that. That's probably an unnecessary risk to have at your property. The other thing to look at, too, is training on the use of these amenities for your guests. From an overarching risk management perspective, not just an insurance protection, but using things like digital guidebooks and other technology where you can make short little videos with a QR code to a YouTube page, which all helps your SEO and your marketing as well, but show people like, look, here's the canoe, here's how you use it, here's how you get in it, here's how you sit in it. If you've never used one before, here's a life jacket, put it on. Even if you know how to swim, wear it. It's something that we require.

Nick Massey
And by having that, you're not eliminating risk, but you're helping defensibility in terms of who's negligent for the injury for the use of that amenity. Then also keeping good record of when these things were inspected. After each stay, we inspect and we document it, and we check the kayak, and the kayak didn't have a crack in it. The kayak was safe for use. The life jackets, none of the buckles were broken. Everything's good to go. That does help if you have to leverage insurance for measures of defensibility in the event of a claim.

Mike Bayer
We're going to take a short break to hear from David Angotti at Guesty to share how Guesty might be the solution to your property management system challenges.

Heather Bayer
So how can property managers evaluate whether they have access to the right number and the variety of booking channels because there's so much available?

David Angotti
This is a great question, Heather. It's one that, unfortunately, Personally, I see the wrong answer from quite a few property managers. So let's think about stocks. If we're saving for retirement and we're 25 years old, maybe we love NVIDIA, and we're investing in NVIDIA, and right now, things are great. But at some point, if we're investing all of our money into one stock, we could have a pretty big hiccup that would impact retirement. Think about our bookings like that. I want our bookings from a variety of channels combined with our direct bookings.

David Angotti
So the magic formula, if there was one, is 50% direct, 50% from four other booking channels. And what that does is it gives us a diversity similar to what you would want in your retirement account. Maybe that direct booking is your NVIDIA, if you will, if you just really believe in that. And then you have these other four. And if one is starting to perform worse, you can reallocate over to the others. And what you really want from your software, though, is an automation of this to reduce the pain and to reduce the effort of the management of this. But yeah, if we think 50% direct, 50% from four OTAs or more, then we're in great shape.

Heather Bayer
That's wise advice. Thank you.

Heather Bayer
We used to have a lot of properties that had hot tubs. Every one of our properties was waterfront. That certainly resonates when you talk about kayaks and canoes because 180 properties, sometimes 200 properties, each one of them would have come with several kayaks, canoes, paddleboards, paddle boats, nothing with motors. But still, people were going out on the water who had possibly never been out on the water before.

Heather Bayer
So we had lots of things in place like that. We had to have the safety kit that was included with every boat. And we said to our owners, you can't have just one safety kit kit to share between your two kayaks, your canoe and your paddle boards, every single one has to have a safety kit. And those kits have to be checked at every changeover to make sure everything is actually in them. And sufficient life jackets. We always advised our guests to bring their own life jackets to ensure an accurate fit, but there were also life jackets there because we wanted to cover everything. So we didn't want anyone to say, Okay, well, you advertised a kayak, but you didn't give me a life jacket.

Nick Massey
Yeah, and that leads into a lot that we see with folks with swimming pools and who are waterfront when it comes to fun amenities, yes, they're fun, and I'm going to have a pool noodle or I'm going to have an inflatable flamingo at mine, but they're not certified flotation devices. And so when you get somebody who doesn't know how to swim or swim well, there's this false sense of security that you're providing them some safety, when in reality, it's indefensible if a claim comes up.

Nick Massey
We start seeing a lot of these foam and/or inflatable lily pads, and they're pretty sizable. I mean, you can get 10-15 people on these things, but that's not something you should be offering to your guests, because they're not going to be wearing a life jacket They're going to go and lounge on that thing, have a few drinks, and then we potentially have a problem around the water.

Nick Massey
So again, those are conversations to really have with the insurance company, too, to make sure, hey, I want to offer this amenity, is that something that I can offer? And if it is something that I can offer, what risk management measures do I need to put in for you to help me if something happens? Those are things to always look at.

Nick Massey
I think folks get this feeling that they should hide things from their insurance provider. If you're operating with, let's just say you do..., you come to Proper and you talk to us. We do short-term rentals, we insure them, we allow for all different types of amenities to be offered. But we do have a short list of things that we don't allow. And you just need to have that open conversation before you put them in play.

Nick Massey
And you had mentioned hot tubs, and hot tubs are great. They can increase your revenue in your occupancy by a decent percentage. In a lot of markets, it's well worth the investment. But one of the biggest risks with a hot tub is liquor liability and then what's called communicable disease. Both of those things are commonly excluded on most insurance policies and the OTA protections as well. And so liquor liability, I mean, call me crazy, people drink on vacation. They're going to have a few drinks in the hot tub. They just got done skiing. Their legs are sore, they're going to have a cocktail sit in the hot tub. What happens when they get super relaxed and had a few bourbons in the hot tub? They could slip and fall. And it's not just a slip and fall accident anymore. It's a liquor liability related claim. Or hot tubs have hot water.....-

Heather Bayer
Can I just stop you on that one? You say it's a liquor liability claim. Just expand on that. Are we, as property managers and owners, liable for somebody who's actually personally having a drink?

Nick Massey
Not always. Not always. But if you are providing a bottle of wine or some welcome gift or package with alcohol, it can definitely fall on you. If something was left behind by a previous guest, they stuck a bottle of vodka or something in the freezer and it was missed on the cleaning or inspection day, and now that new guest shows up and goes, Oh, this is nice. There's a bottle of vodka, I'll make a martini. You could be held liable. It also depends on your policy, right? So some liquor liability is written in a variety of different ways. One thing we did was we just eliminated that, said we're not going to have that in there because it's confusing. But there are policies out there that say providing an area basically for intoxication, there is no coverage. They could very well come in and say, Well, you may not have directly gave them the alcohol, but they got drunk at your property while you weren't present. Now we're denying this claim because of that. And so some of that language is very much fine print, if you will, and wanting to know and understand what that means for coverage.

Nick Massey
I will say I'll find it hard. It's not like a scare tactic thing. I would find it hard in a lot of insurance policies for them to deny that particular scenario because of the alcohol, unless you have that specific language around providing or contributing to their intoxication and providing a home where somebody can get drunk at could very well fall under that category.

Heather Bayer
You also mentioned communicable diseases. I recall numerous occasions of calls from guests to say that they had got home after their vacation and they had a number of symptoms went to a doctor who then diagnosed hot tub folliculitis, which is one of... Is this one of these diseases you're talking about?

Nick Massey
Yeah. Communicable disease is in two parts. There's viral communicable and bacterial communicable. Most insurance policies and the OTAs exclude both. Very, very few insurance providers actually cover bacterial communicable disease, which is where hot tub folliculitis or legionnaires, commonly known as tub rash would fall into. While for the most part relatively harmless in most cases, other than being uncomfortable and cost of ointments and maybe some oral medication to take care of it. It could become life-threatening if it gets into the bloodstream, which is an unfortunate thing we've ran into. If anybody has a minor lesion on their body and your hot tub is not up full standards of cleanliness, then you could have a problem. There's a reason that these other companies exclude this stuff. They are very expensive to deal with. That's why those policies tend to be less expensive, or you have the OTA cover that just says, We do so many bookings. We have so many properties with hot tubs that we're just not going to cover it. It's just not worth it to us and the fees we charge to cover the expense of the insurance policy for every booking, we're just going to exclude it.

Nick Massey
And then other companies, especially like Proper, we do exclude viral communicable disease, but we do not exclude bacterial. And so if you have a hot tub, that's something that you want to make sure that you have coverage for it. Absolutely.

Heather Bayer
And the other thing that you mentioned was documenting the checks, water changeovers, when the last water changeover was, what the chemicals were introduced at each changeover, just documented and signed off. Something I wanted to address with you on this one was, does it have to be a registered hot tub company that comes in on every changeover to deal with the hot tub? Or is it okay for a housekeeper or whoever's doing the changeover to administer those chemicals to bring the hot tub to a decent balance and then sign something to say that this is what I've added to it and this is the pH reading, etc?

Nick Massey
Yeah. No, it doesn't. But it really depends on how risk averse he might be. One of the fundamental things when you're thinking about insurance and risk management is transfer of risk. That's the basis, that's the fundamentals of insurance. You're transferring a risk gone to a company for X amount of dollars, and in exchange for that, they're going to cover X, Y, and Z. And the more money you pay, typically, not always, but typically, that means you're going to get more coverage, fewer exclusions. And So you're transferring that risk off to an insurance company.

Nick Massey
In the basic practice of risk management, it's the same theory. So where are we transferring that risk to? Am I transferring that risk onto myself, where I am keeping all I have the documentation. I have my test kits, and I'm keeping track of those test kits on taking the photos. I have uploaded them into some document source for each and every property that says we do this every turnover, where we check the levels. If the levels aren't right, we drain and refill and put everything in. We do a semi-annual, where we do have the actual hot tub company come in and do routine maintenance and all of that.

Nick Massey
Sure, you could do that. It just takes a a lot of documentation, or you can have that hot tub company come on every changeover, which if you do three bookings in a week, that's going to become very costly. So I don't know if that's up everyone's alley, and it doesn't necessarily need to be. It all comes down to documentation. It's like the same with, I had mentioned a pontoon boat earlier. It's like, okay, you're on a lake and you have a pontoon boat with a 50 horsepower motor, but you can offer that to guests. That's fine. You just won't have any insurance.

Nick Massey
Your home insurance policy, no matter how robust you get, it's not going to cover motorized vehicles. It's just not. It's not covered. So where do we transfer that risk to? If we don't want to do that, well, you transfer it to a marina. You go and partner with the local marina, you see if you can get some discounts for bringing them more and more clients through your property, and have the folks rent the boat from a licensed facility that is insured for boat rentals, and now you've transferred the risk onto that provider.

Nick Massey
It's the same with baby equipment, the number one recalled product in the world, baby equipment. You can have baby equipment at your property and be kid friendly, that's perfectly fine. You just have to stay on top of these recalls and remove the product when it's been recalled. You can set up notifications with consumer product safety and go through all that, or you can just backlink to baby quip and have baby quip drop off all the equipment anytime somebody needs baby stuff. Again, it all comes down to How do you want to do risk transfer? How do you want to do that? What makes sense for you and your business? And how much do you want to document it to further protect yourself and provide defensibility for the insurance company you go with?

Heather Bayer
It links in so closely to what Justin Ford talks about with everything he does on safety. I've had the discussions with him on kayaks and watercraft and bicycles, and as you say, baby equipment, because people think, I think owners think they They are doing such a favor by providing a pack and play and providing a high chair, but it only needs a screw loose to become a major incident.

Nick Massey
Yeah, I mean, the best way to avoid the risk is to not take the risk at all, but then that's boring. Then you want to be a short-term rental operator and you want to be in this wonderful business. It's all about doing the right things and working with the right people and asking the right questions and making sure you're building a team around you, not not just in your business like StayWise. StayWise should have a dedicated risk manager, which is more than likely end up being a maintenance person on their staff, and their job is safety. Their job is risk management. Their job is to go into these properties and document and do that. Or bubble wrap your house and don't provide any amenities at all and say, Yeah, we have a dock, but you're not allowed to use it, because I don't want you to slip and fall and get hurt.

Nick Massey
You're not going to generate any income. You're not going to enjoy being in this business. You're going to be getting constant headaches and laying awake at night. So utilizing vendors like ourselves who specialize in this, who know this in and out better than anybody. You mentioned Justin Ford, optimizing your risk management strategies by using the safety inspections that they provide at all the properties. Technology. There's so much amazing technology out there that StayWise could have had in place that would have stopped this $45,000 in damage from happening from the start.

Heather Bayer
Can you share some of that? What is this technology Yeah.

Nick Massey
There's a handful of different companies out there that do different things. NoiseAware has been around for about a decade. They specialize in noise. Specifically, you have companies like Minut who do noise, along with a lot of other monitorings as well. You have companies like Wind, W-I-N-D. They do noise and smoke. Alertify, which is electrical, specifically. Then there's a new company out there that I really like just because they're so advanced. A little bit more expensive, but for a property manager like StayWise, they can implement this into all their properties. It is a little costly, but StayWise can buy it Then if a property drops off their book of business out of their portfolio, they can take that equipment and move it to the next home that they sign on. It does 15 different types of monitoring, from noise to smoke to vibration. It's going to do things like moisture detection, heat control, carbon monoxide, all sorts of different items that you can plug into each property with a dashboard. You have a separate dashboard, and this device is at Property A, this one, B, C, D, and you see what's going on. It can detect dripping water noises throughout your property and things like that.

Nick Massey
It's really cool. I think that's something folks should look into. You also have other ones like StayFi.

Heather Bayer
What's that one called?

Nick Massey
DwellWell. Dwell, Well. I just like it because it does so much. I think it's the best bang, bang for the buck. Stayfi is a great one as well for a couple of reasons. One, you get to know how many people are plugged onto your WiFi, and so you can tell If there's 35 devices hooked up to your WiFi and your property only houses eight people, either these folks have an immense amount of devices that they brought with them, or there's a lot of people at your home. But that one also works great if you're going into direct bookings because it allows to capture everybody's email address that's signed on to your WiFi. So now you can market to them directly to come and stay with you again.

Nick Massey
These devices are not terribly expensive. Yeah, there is a little upfront cost and some set up. Most of them have a monthly subscription fee to monitor everything and assist you with the back end of your business there. But they can help prevent... They're way cheaper than $45,000, I'll just say that.

Heather Bayer
Yeah. I think that's what's got to be kept in mind. Coming back to StayWise as we finish off this conversation, going forward, let's say that they're going to get over this. They will get over this. They will move on. They want to grow. They want to manage multiple properties. What would be in an insurance strategy to address any risks that come along with that scaling?

Nick Massey
It goes back to what I said earlier about finding a partner you really trust Now, you can't force anybody to buy one particular insurance product. You could, StayWise could come in and say, We've partnered with Proper, and we're not going to list your property unless you buy their insurance because we trust in it so much. That's fine, but that's going to limit your ability to scale.

Nick Massey
The insurance strategy for me breaks down into four parts. It's like a puzzle. It's like a thousand-piece puzzle that you throw down on your table, and it's all upside down. Where do we start? We have to start with the corners and then build in from there, and hopefully have somebody draw us the picture to some extent so we can help put everything in the right place. You need to start with your property manager level coverage. You need to start there. You don't need that protection if you self-manage your own properties. But when you're operating and managing a third party, you need to go out and make sure you know and understand and have the right policy in place for your business.

Nick Massey
Number two, you need to have a great referral, if not three total, that you know specifically specialize in short-term rental insurance. There's not a ton of us out there that do that. And so it's very easy to find those three. I'm one of them. If you're listening to this, we can have that chat and then you can go. The other two are pretty easy to find as well. And know what we do, who we are, and how to get a hold of us so you can recommend your clients to give us a call, have this consultation, as well as educate yourself around the why Hey, we're going to... You're a lakefront. We're going to offer amenities. You need to make sure you have off-premises liability. These companies provide that. You're going to be pet friendly. They don't have a dog limitation when it comes to liability.

Nick Massey
The third one is the supplemental protection. Find a company. There's eight or nine of them out there. There's a bunch. Find one that you like and implement that by booking strategy to have additional supplemental protection with each booking. Those are typically paid for by the guests with the reservation anyways. So it's pretty simple. And then last but not least is the travel insurance component, which is not my specialty, but there's a handful of companies out there that do travel insurance. They're usually provided through the OTAs, but you can work with them and get them plugged in to your direct booking platform. That way, if there's a last minute cancelation, instead of you refunding all of that money back or 50% of that and creating some type of conflict with the guest, they're just going to claim against the travel insurance to get their money back for their flights and their stay and the rental car and whatever it might be for this trip. So you're not backcharging that stuff.

Nick Massey
Those four things are what a property manager needs to really have an understanding of and have them implemented. And while it doesn't resolve all the risk, that is going to be the best way to structure insurance in your risk management plan so you can leverage it when it needs to be leveraged.

Heather Bayer
That is all great, such great information, Nick. You've shared so much, and I think StayWise, having listened to this, could go on and make some big changes that would make their scaling a lot easier and a lot less risky.

Nick Massey
Yeah, it always comes down to we preach it all the time, the more you know, the more you're worth. For StayWise as a property manager to learn from this, hard lesson to learn, especially with their property owner, but to take this as a way to help build SOPs around ground insurance and managing risk and property check-ins and check-outs, technology implementation, and start scaling that across the current portfolios. Then once you start adding on new properties, those procedures are now in place locked in. We don't put the property online until all these boxes are checked and our property owner is on board. You don't want 5% of your problems to turn into 95% of your day. By working through those and getting set up correctly at the beginning is a great way for success.

Nick Massey
Again, if you're at five properties or you're at 5,000 properties, granted, the chore at 5,000 properties is going to be a little bit more, it's never too late to start and start building this out and implementing it to ensure the future success of your business.

Heather Bayer
Well, there you are, folks. That is a really great rundown on how to really manage your insurance effectively. You can find Nick at Proper. I'm going to ask you to tell us what your contact info is.

Nick Massey
Yeah. It's Nick Massey. I'm the Director of Sales. The best way to get in touch with us to make sure you're speaking with the right person in my office would be to call our phone number at 1-888-631-6680. You can also go to our website, www.proper.insure. Tons of information on there. Even if you're not looking for a quote on insurance, lots of great info on our blogs and all sorts of different things that we put on there. Regulatory things, we have maps that backlink to regulatory items in your community if we know about it. So, yeah, That's the best way to get in touch with us. And even if it's just to have a conversation, you might feel very comfortable with where you're at, but we're here to walk through it. Even if you don't end up doing business with us in that realm, I feel very confident you'd walk away from the conversation learning something new.

Heather Bayer
That is great. Well, thank you, Nick, for joining us. Thank you to Proper Insurance for sponsoring this Insurance Week, which is still going on. So right until the end of this week, we'll be talking about insurance. So make sure you stay keyed in on this. Check the LinkedIn Vacation Rental Formula profile, where you'll find all sorts of information on the rest of SSTIR Crazy Week and how you can get involved. So once again, thank you, Nick. You'll be back on show before too long, I'm quite sure. It's always a pleasure having you with us.

Nick Massey
The same, Heather. Thanks for having me. Great chatting with you.

Heather Bayer
That was a great conversation with Nick Massey, Director of Sales at Proper Insurance, as ever, brilliant conversation. And I'm just saying to Nick at the end there that I learn so much about insurance every time we have a conversation, and maybe we talk about very similar things, but always something new comes out of it. And I know that if I went back and restarted or went into this business once again as a property manager, I would do things so differently, particularly in terms of insurance. It would be one of the very, very first things I thought about. It would be one of the first things I would think about when I went to visit and acquire a new property. We did safety checks, but it all comes back to insurance. You can do all the safety checks in the world, but if you're not fully insured and something does happen, then you've got an issue to defend and to deal with.

Heather Bayer
Yeah, what a lot of great information there, and I am sure we will take this further as we go ahead through the rest of this stir-crazy month. So thank you so much for joining me. Make sure of course, you check out the LinkedIn and the Facebook posts that we're currently doing. I'll hand this over to Mike in a moment, and he'll talk a little bit more about SSTIR Crazy Month. I will see you again in the next episode.

Heather Bayer
It's been a pleasure as ever being with you. If there's anything you'd like to comment on, then join the conversation on the Show Notes for the episode at vacationrentalformula.com. We'd love to hear from you, and I look forward to being with you again next week..

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