Why you shouldn't lower your MTR pricing for Insurance Companies
When it comes to mid-term rentals, it is best to proceed with caution and resist the temptation to cut expenditures in order to please insurance companies.
Based on my personal experience operating MTRs and interacting with insurance adjusters and rental families, it is clear that important factors should determine MTR home pricing, with rates equivalent to or more than nearby hotels.
Let's look at the following viewpoints while pricing mid-term rentals:
Insurance Companies save expenses from MTRs
Insurance firms can save significant money by placing claimants in homes with kitchens. This allows for a decrease of payments for restaurant expenses throughout the displacement period. Providing fully equipped kitchens allows families to cook and prepare meals at home, potentially saving thousands of dollars in restaurant bills.
Matching Equivalent Space and Value
When placing displaced families in temporary accommodation, insurance adjusters must match similar space and value. Hotels, unable to match the specs, facilities, and size of a family's original home, fall short of offering a similar alternative.
Cost savings on laundry
Having a washer and dryer on-site/in the home reduces the need for insurance to cover or reimburse families for dry cleaning and laundromat costs.
Accommodating larger families with pets
A four-person family with pets usually requires more than one hotel room for a two-week/1-month or longer visit, thereby tripling lodging costs. Additionally, hotels frequently charge a daily fee for pets, which raises the overall cost.
Even when renting a high-value residence, insurance companies can save money by not having to reimburse for a large number of restaurant receipts. Another reason people choose MTR/STR properties is the hassle of processing hundreds of receipts.
Insurance adjusters have approved MTR properties several times at rates displayed on platforms like Airbnb and VRBO, which can range from $6k to $20k or more per month.
But still consider…
Despite these data, vigilance should be exercised as more homeowners join the effort to accommodate displaced families. Increased housing inventory in the MTR region may lead to saturation, allowing insurance companies to negotiate unreasonably low rental pricing, making MTR less appealing to both homeowners and hosts.
Finally, while cheaper pricing may appear appealing, MTR hosts must be aware of the possible dangers of accommodating to insurance firms' requests, as this may eventually devalue the MTR sector.
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