Welcome to another Ask Me Anything (Ask Us Anything?) episode! Each week we’ll answer your questions on STR, real estate, OTAs, and everything in between.

Andy asks:

Regarding insurance, how do we as hosts assess if the 3% fee we save with direct booking is worth the cost of purchasing our own insurance for our STR?

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[00:00:05] You're listening to the Thanks for Visiting podcast. We believe hosting with heart is at the core of every short-term rental. With Annette's background in business operation--

[00:00:15] And Sarah's extensive hospitality management and interior design experience, we have welcomed thousands of guests from over 30 countries, earning us over a million dollars and garnering us thousands of five-star reviews.

[00:00:35] We love sharing creative ways for your listing to stand out, serve your guests, and be profitable. Each episode, we will have knowledgeable guests who bring value to the short-term rental industry--

[00:00:44] or we will share our stories of our own experiences so you can implement actual improvements to your rentals. Whether you're experienced, new, or nervous to start your own short-term rental, we promise you'll feel right at home. Before we dive into the content, let's hear a word from our sponsor.

[00:01:01] Hello, listeners, viewers, welcome back. My name is Sarah Karakaian.

[00:01:05] I am Annette Grant, and together we are--

[00:01:07] Thanks for Visiting.

[00:01:09] This is an AMA episode, Ask Us Anything, Ask Me Anything. If you want to participate, go to thanksforvisiting.me in the upper right-hand corner. We've got a big red button, you press it, it takes you to a place where you can record your question, and then we will answer as many as we can right here on this show.

[00:01:25] So keep them coming. We love it. Let's do it.

[00:01:28] We're going to answer, today we've got Andy.

[00:01:31] Hey, Thanks for Visiting. Thanks for all you do on the podcast and all the information you're giving us as hosts. My question is regarding direct booking. How do we as hosts assess if going direct booking which would require purchasing our own insurance, again, understanding you recommend that anyway, how do we assess if it's worth the amount of money to go direct booking and purchase the insurance? How do we assess if that's worth keeping the 3% that we would save on, say Airbnb by not booking with Airbnb? I hope my question is clear. So how do we assess if the 3% fee we're saving by not booking on Airbnb is worth the cost of insurance, when the insurance is going to be most likely a monthly fee and our Airbnb income fluctuates, depending on who's booking and who's not? Thanks so much.

[00:02:41] Such a question, Andy. We are ready to answer those.

[00:02:42] Number one, Andy, thank you for asking this question because Sarah and I talk about it amongst ourselves and inside our membership very, very often. And it's great that we can answer this question. And when we say we talk about this often, we talk about direct booking, we talk about insurance, we talk about numbers and waivers. You hit so many cords. So let's get into it.

[00:02:45] Where do we want to start? There's a lot of parts to this one. My blood is going because I'm just so excited to talk about this because honestly, I really hope every single listener who's ever downloaded Thanks for Visiting and those who haven't downloaded are going to listen to this. Because what I want you to know, at the core of my being, of my soul, of my fingertips, of my toes, Airbnb is not going to save you, Airbnb is not going to protect you. They are not an insurance company, everyone. They decide whether or not they're going to throw some dollar, dollar bills your way when something goes sideways. And just because you feel it is justified that you deserve dollar bills from Airbnb, that does not mean they are going to provide those dollar bills.

[00:03:54] And what I want to say about the question as a whole, Andy, is Sarah and I talk to so many people all the time. Remember what, you are a business owner and hopefully everyone is in this for a long-term investment. And a long term can even be 12 months, 24, 36, five years, 10 years. So we want you to look at your whole entire business not just Airbnb, which is a marketing platform for you. So first of all, Andy, we're like wait a second. Do you not have short-term rental insurance right now because if you don't please make sure that you do that ASAP. Does your insurance company currently know that you are short-term renting your property?

[00:04:32] To get more specific, does your homeowners' insurance know? So we all need no matter who we list our listing on, whoever's platform we list our listing on-- booking.com, VRBO, Airbnb, Furnished Finder, it doesn't matter-- your homeowners' insurance needs to know the way you're operating this property. It's number one. Number two, Airbnb is not insurance company. They have this thing called air cover and it was their marketing intention to make you feel like this air cover is going to protect you and you have no worries if your bookings come through Airbnb.

And we can share with you not only from personal experience but from the 300-plus members inside of our membership, that they have time and time again have decided not to err on the side of the hosts requests for funds when things happen. And so there are ways around this to protect yourself, not only can you have your own in-house damage waiver program, where you set your own funds aside to tackle instances like these that are not common, but when they happen, they can definitely throw a wrench in your financials. But there are companies that also offer things that makes you feel more comfortable. Proper Insurance offers some waiver programs, Superhog offers some waiver programs or other companies that will help you. But again, when you do that, you are then putting the decision on whether to send you funds with these other companies. And so that's why for those reasons, we don't think you need to, but again, it goes your comfort level.

[00:06:01] And so we're saying if you are on VRBO, if you are an Airbnb, if you're on booking.com, Furnished Finder, you still should have a short-term rental specific policy on your home. And you can reach out to your broker today and make sure that that's covered there. So that step one there, that's not talking about the percentages of direct booking. But that's just overall protection for your home.

And we'll let you know too, there are some insurance companies, especially in the short-term rental world, there are very specific, they might not take your home on depending on where it's located if they're maxed out in that region. So even some of the places that we're talking about, it doesn't mean just because you apply that they're going to automatically accept your property or even if you're willing to pay. So we do just want to put that out there also.

[00:06:45] I will say more often than not these days, that's because short-term rentals, vacation rentals are so popular, these insurance companies are finally getting their act together and they're figuring out how to protect us, and how to offer insurance for those. But honestly, we all know that when you claim something, it has to be of a certain amount to make it worth it. So anything under those amounts, we need to be prepared as short-term rental operators to cover stained pillows and rugs and couches, and broken wine glasses. All those things, fix it move on, and think bigger, I guess is what I want to say.

When it comes to the 3% thing, Andy, you are not saving money necessarily by feeling comfortable paying that 3% with Airbnb. When guests book direct with you, you should incentivize them to do so by having it be less expensive than on the OTAs. But it is, I'm not going to lie to you, it's a tricky place to find your pricing because you'd remember, depending on how you take your fees from your guests, there are processing fees involved.

[00:07:48] Absolutely. And also, it's just longevity of your business. We love to talk about this. Your property, not just the property itself, but you could sell this as a business, you can add that extra layer, and Sarah herself has done this, this is a business in a box, if you will, like hey, you want to let people, that next homeowner, potentially, to have if you have a direct booking site, and you have repeat guests, because it's more of like, oh, I listed on Airbnb, VRBO, when you sell it, you're going to take all the reviews, you're going to take all the info, but if you have a direct booking site, you have some digital real estate, that will sweeten the pot there.

And that's where we also want you to invest in digital real estate. When I say invest, $12 you can buy one on Google domains or GoDaddy and then build out from there. But I'm sure you have a wonderful network of people, you have past guests that would love to come back again. And Sarah and I have experience with it. We know many people that book out their whole entire home 365 days on a direct booking site and they don't even have to depend on an OTA for that.

[00:08:54] Let's all remember too that prior to 2008, vacation rentals were thriving and Airbnb did not yet exist. And so we are the new age group of people who are like yes, Airbnb brought it to us, it became accessible for us, we learned--

[00:09:10] And they are fabulous marketers and we love to say that.

[00:09:12] And Airbnb has allowed us to open up our minds and make this business easier for us to connect us with more guests, but at the end of the day, okay, thank you very much, Airbnb, but now I have to take ownership of my business and make sure that I'm using you as a tool and not the be end-all.

And Annette and I like to say that we say the word Airbnb on our Instagram and some of our marketing because we want to bring you into our world, but you are a short-term rental business owner. You are a hospitality business owner. So another tip for you, Andy, and everyone listening, is renter's insurance. You can as a property owner operator offer your guests, remind your guests to purchase travel insurance before they arrive as well, and so that you don't feel like you need-- you're not on pins and needles with your financials when it comes to your bookings.

So the whole 3% versus the insurance, we really want you to change your mindset on that. It's not one or the other. No matter if it's a direct booking or Airbnb, you're going to have to pay process-- that's Airbnb's way of taking care of the transactional part of it, which is great. But the insurance discussion, Airbnb does not provide you with the protection they'd like you to believe they're providing you with. And that's the message that Annette and I want you to take home today when you're done listening to today's episode.

[00:10:23] Yes, because there's things like lost income if something were to happen, there is bedbug coverage. There's all these other things that we want you to be aware of. So, Andy, great question.

[00:10:34] We could talk so much longer on that, but we're not going to--

[00:10:39] Unpack that. But, Andy, great question. We hope this helps. If you have a follow-up question, please send it in. But everyone, we are encouraging you today to make sure that you're covered.

[00:10:50] Yes. Thank you so much. My name is Sarah Karakaian.

[00:10:52] I'm Annette Grant, and together we are--

[00:10:54] Thanks for Visiting.

[00:10:55] We'll talk to you next time.