STR insurance - Smoky Mountains

[Eric Brown]

I'm closing on a STR cabin in the smokies with a purchase price of $520k. I received a landlord dwelling quote from Travelers for Coverage A - dwelling for $223,600 plus 25% of additional replacement cost coverage which puts the total at $279,500, plus $28k for furnishings and $70k for loss of use.

I understand I wouldn’t need to purchase the land in a rebuild, but $280k seems low for a cabin worth $520k, not to mention the risk of inflation continuing to drive costs higher for building costs and labor.

Does anyone have experience in this area or open to sharing how much dwelling coverage you carry for your property in relation to the market value? Other than asking a builder directly for an estimate (I'm not sure if they would even provide), any ideas for how I can determine the appropriate coverage amount? I don't want to be paranoid and over-insure, but I have heard stories recently of guests at STR cabins in the smokies literally burning the cabins to the ground so I want to make sure I'm covered.

[Collin Hays]

You need do not need a landlord policy.  You are running a quasi-hotel, so you need an overnight rental policy. Sometimes referred to as a chalet policy.  It is a specialty policy that covers the unique risks  of a vacation rental.

In the Smokies, the gold standard is Southpoint Risk in Knoxville.  

Do not underinsure.  I did so myself and it cost me $100,000.  I have an entry for this in my blog on this site.  For another $100 a year, I could have been adequately insured.

If your purchase price is $520K, then I would insist on insurance for that.  The way things are trending, you’ll be underinsured in no time.