This holiday season many homeowners will rent out their primary or secondary residences via Airbnb.
Travys Wilkins from independent digital brokerage, CompareGuru, says that there are important home insurance considerations that hosts need to take into account before embarking on a rental agreement.
Wilkins highlights four factors to consider
If something goes missing, Airbnb isn’t liable
Airbnb provides protection to its hosts by covering "up to $1 000 000 for damages to covered property".
This is the rare event of guest damages above the security deposit or if no security deposit is in place. It essentially means that if a guest slips and falls in your house and wants to sue you, Airbnb has a mechanism in place for that. It also means if they burn the gazebo in the garden down, you're covered.
The Host Guarantee Program does not replace your homeowner's insurance or renter's insurance. There is a misconception that Airbnb will pay out should any household contents go missing.
According to the site, "The Host Guarantee Program doesn't cover cash and securities, collectables, rare artwork, jewellery, pets, or personal liability. Hosts should rather secure or remove valuables when renting their place.
“Not all insurance will cover damage or loss to property caused by a guest renting your space,” said Wilkins.
Household insurance is a must when renting out your home to travellers.
Inform your insurer
Wilkins said that full disclosure to your insurance provider is always the best policy. "There is always a risk involved with renting your home to people you essentially don’t know, and it’s this risk that makes it even more important to let your insurer know about the rental agreement,” said Wilkins. In the unfortunate event that you’re needing to claim, it’s always better that your insurer is aware of the rental.
Understand what is and isn’t covered
Depending on your policy, 'business pursuits' on your private property may be excluded from your cover. It is highly advisable to contact your insurance provider to find out how renting a room in your house, via Airbnb, may affect your risk profile, and as a result, your premiums.
“In some cases, homeowner’s insurance policies require visible signs of forced entry before a claim of theft is paid out,” said Wilkins. To help combat this, he suggests having a written and signed agreement with the Airbnb guest.
The agreement will indicate that they will be held liable for any stolen or damaged items if there are no signs of forced entry.
Business or pleasure?
If you choose to use Airbnb on a continuous basis, to earn a more fruitful income than a long-term rental, your insurer may regard this as a business. In such cases, you will be advised to take out business insurance, as home insurance policies do not cover business pursuits operated at home.
Wilkins references the recent announcement by the City of Cape Town making it easier for homeowners to rent out their properties via Airbnb.
The proposal allows for the short-term letting of a house or flat for a period not exceeding 30 consecutive days for the same guest.
“Should your rental agreement be longer term, then it becomes even more important to get the proper advice on the appropriate insurance coverage required to cover all eventualities.
It’s critical to understand all the in’s and out’s of renting your property out for any period of time – be it a couple of days or a couple of months,” added Wilkins.