Denied umbrella policy with short term rental

[Frank C.]

We are closing on our first rental house in a couple of weeks.  We are considering doing a short term rental (Airbnb, VRBO) for the first year until our daughter moves into the house for college accommodations.  She will then find roommates and live very cheaply as a resident landlord.  We have all of our insurance with USAA (cars and primary house) as well as a $5 mil umbrella policy.  The premiums are about $2300 per year for the umbrella.  When we spoke to USAA about insuring the new rental house, they said that they would not renew our umbrella policy if we had a short term rental in South Carolina.  We could stick with the long term rental and keep our current insurance.  Or should we shop around for a new umbrella policy and a policy to insure a short term rental?  Any suggestions?  

Financially, it might be better from a cash flow perspective to do the long term rental. However, I can involve my wife and kids in the business of managing the short term rental and this has value above and beyond the cash flow.  I would consider it cheap education if we lost a few thousand in rental income by trying Airbnb.

[Ryan Galloway]

USAA can act as your agent for an umbrella policy with their partner RLI as the carrier in this case. You don't need to switch over any of your other policies, you just need to make sure you meet the minimum coverage requirements.