Sedona, AZ Short-Term Rentals: Insurance Requirements (2026)

SCC 5.25.090, adopted consistent with Arizona's vacation rental statute (A.R.S. § 9-500.39), sets the insurance floor for every permitted short-term rental in the city. Subsection (A) states the requirement plainly: 'The owner, owner's designee, or the online lodging marketplace platform shall maintain liability insurance appropriate to cover the short-term rental in the aggregate of at least $500,000.' The obligation can be satisfied by the property owner's own policy, the designee's coverage, or coverage supplied through the online lodging marketplace (such as a host protection policy from a booking platform), giving owners flexibility in how the $500,000 aggregate is met.

Compliance is not just paperwork on file with an insurer; subsection (B) gives the city an active verification right: 'Proof of the required liability insurance coverage shall be provided to the city upon a request by the city within 10 calendar days of a request from the city.' That 10-day production window means an owner who cannot promptly document coverage is out of compliance even if a policy technically exists. The insurance duty sits inside the same permit structure as the rest of Chapter 5.25: the original permit application under SCC 5.25.030(B)(6) already requires the owner to acknowledge compliance with, among other things, 'evidence of liability insurance,' and a sidewalk-style prohibited-use or violation record tied to inadequate insurance can factor into the permit suspension standard under SCC 5.25.110 if it rises to a serious threat to public health and safety.

The requirement applies citywide to any property operated under a Sedona short-term rental permit, regardless of which county side of the city line the parcel sits on.