Carmel, IN Short-Term Rentals: Insurance Requirements (2026)

Insurance is a clear requirement for short-term rentals operating under Indiana law. The state framework requires a short-term rental owner to maintain primary liability insurance covering third-party claims, such as bodily injury, death, or property damage, arising from the rental of the property. Carmel's own short-term-rental materials likewise indicate that additional insurance is required to operate a short-term rental in the city, consistent with the state mandate and with conditions the Board of Zoning Appeals could attach during the special-exception process under the Unified Development Ordinance (Z-629-17). Hosts should not assume that the limited liability protection bundled into platforms like Airbnb or Vrbo is sufficient on its own; many standard homeowner's policies exclude or limit coverage for commercial short-term rental activity, so a dedicated short-term rental or landlord/commercial policy is often needed to satisfy the primary-liability requirement and protect the owner. While Indiana House Enrolled Act 1210 (2026) curtailed local caps and bans and voided Carmel's UDO-based STR restrictions, insurance obligations rooted in state law and general liability exposure remain relevant. Hosts should confirm the exact current coverage expectations with Carmel's Department of Community Services and their insurer, document active primary liability coverage before accepting bookings, and verify whether the rental platform's host protection supplements, rather than replaces, their own policy.