@Rebecca193 I agree with you that crossing your fingers and hoping you don't end up with a guest-related claim that can be rejected by your insurer is a bad policy.
We went with Farmers, which allows for a "business pursuit on premises" amendment to a traditional homeowners policy. Our Farmers agent has advised us that as part of the application they sent in to Farmers' underwriting dept, he has specified we are operating a short-term rental on our property to ensure there are no suprises. He's also confirmed that Farmers is writing (and, most importantly, honoring) policies for STRs in Texas at this time.
Through Farmers, we were able to secure $2 million in property liability and another $2 million in personal umbrella liability coverage for less than what we were paying for our previous policy from AMICA. We also moved our auto coverage off of AMICA and onto a Farmers policy becuase that's a stipulation of most umbrella policies. (Umbrella liability insurance follows you wherever you go -- you could cause an accident in Barcelona and be covered if someone sues you -- whereas property insurance liability restricts coverage to your property.) When you add the $1 million in liability coverage Airbnb supposedly extends to hosts, we're covered to the tune of $5 million.
Sometimes Farmers will refer you to Foremost, which is their specialty insurance arm. Foremost writes Lloyd's policies -- similar to what you will find from a lot of brokers. Most of these policies offer specialty property insurance coverage with large liability amounts of $1 or $2 million. (The rule of thumb in liability coverage is to calcuate your net worth and get more than that in coverage.)
Proper Insurance is a Lloyd's "coverholder," which means they have the authoritiy to write Lloyd's policies and authorize claims payments. (Lloyd's policies tend to cover unusual or high-risk situations... oil tankers, aircraft, coastal vacation homes and the like. It's a fascinating model...you have a large group of investors, and each investor underwrites a small part of your policy so if you do have a catasrophic loss, no single entity is on the stick to cover a big payout.)
I spoke with Ian Smith at Proper and had a very good experience with him. Proper is different from other insurers -- even most brokers who will hook you up with a Lloyd's policy -- because Proper's policy is a General Commerical Liability Policy. This is a policy expressly designed for businesses. What that means is they cover virtually anything associated with your business. Guest hurt himself while riding one of your loaner bikes? You're covered. Guest gets drunk and shoots July 4 fireworks onto your neighbor's roof and starts a fire? Covered. You write an honest review of a bad guest and said bad guest sues you? You're covered. Homeowners and property insurance policies don't cover that kind of stuff.
Our Airbnb rental is in our backyard, so we're always around. That's why we were comfortable sticking to homeowners coverage with the "business pursuit on premises" amendment. But if we were renting a lake house or other place that was not within our immediate and constant control, I'd pay the extra and go with Proper. Ian's number is 1-888-631-6680.
Proper ended up costing around 70 percent more than Farmers. So it wasn't out of this world, and it is every different coverage. They also automatically provide for things like lost STR income if you have a fire or other disaster (remember, it's a commercial policy), whereas our policy doesn't. That's a trade-off we made by going with Farmers.
Hope this is helpful, and good luck!
Carl and Diane