Risk for Ja­maican home­owner as Airbnb host

Jamaica Gleaner - - BUSINESS - Cedric Stephens Cedric E. Stephens pro­vides in­de­pen­dent in­for­ma­tion and ad­vice about the man­age­ment of risks and in­sur­ance. For free in­for­ma­tion or coun­sel, write to: aegis@flowja.com.

QUES­TION: I un­der­stand that the Gov­ern­ment will soon sign an agree­ment with Airbnb. That com­pany, ac­cord­ing to in­for­ma­tion on its web­site, is an “on­line mar­ket­place and home-stay net­work that en­ables peo­ple to list or rent short-term lodg­ing in res­i­den­tial prop­er­ties”. My wife and I live in a four-bed­room house in Nor­brook, St Andrew. We are think­ing about reg­is­ter­ing as hosts and mak­ing two of the bed­rooms avail­able to short-term vis­i­tors. What are the in­sur­ance im­pli­ca­tions? The house is not cur­rently in­sured.

-M.E.M, Kingston 8.

IN­SUR­ANCE HELPLINE:

A few weeks ago, I read an ar­ti­cle in the Mi­ami Her­ald about the mis­for­tunes of a 71year-old Haitian tech­no­crat. It said that for “three decades, (he) lov­ingly grew the ma­jes­tic ma­hogany and cedar trees, cre­at­ing a lush canopy in his child­hood ham­let, the place where his par­ents eked out a liv­ing from the earth” in Haiti’s south­ern penin­sula, the bread­bas­ket of that coun­try.

“He planted his first tree, a ma­hogany, on May 2, 1989, a year af­ter his fa­ther died. Over the years, he planted 2,699 more, along with 1,000 cedars, all with­out us­ing an ounce of fer­tiliser.”

In ad­di­tion, he in­vested US$300,000 (J$38.5 mil­lion) in restor­ing his fam­ily home — a four-bed­room house with four full bath­rooms. When Hur­ri­cane Matthew made a di­rect hit with 140 miles per hour winds, the for­est that he had es­tab­lished and the fam­ily house were al­most to­tally de­stroyed.

No in­sur­ance was avail­able to cush­ion the dou­ble blow he suf­fered.

Many lo­cal house­hold­ers, like the retired tech­no­crat, tend to place very lit­tle im­por­tance on in­sur­ance. They be­have as though bad things can­not hap­pen.

Thanks for rais­ing a top­i­cal and in­trigu­ing is­sue about a sub­ject some prospec­tive hosts may ig­nore. Two things struck me af­ter I read the re­lease about the meet­ing be­tween Airbnb ex­ec­u­tives and the tourism min­is­ter. The first is that the on­line plat­form said “they were re­spon­si­ble for bring­ing in roughly 32,000 tourists” to Ja­maica within the past year and be­lieve the col­lab­o­ra­tion with the min­istry will al­low this num­ber “to grow ex­po­nen­tially”.

The sec­ond thing was that their web­site “cur­rently ac­counts for 2,300 ac­tive hosts and 4,000 ac­tive list­ings.”

In plain English, this means that there are cur­rently 4,000 fa­cil­i­ties avail­able for short­term rental around the is­land. How many of these ac­tive and prospec­tive hosts are aware of the risks that they face? Two groups of risks are as­so­ci­ated with host­ing for­eign guests.

One in­volves the pos­si­ble loss of or dam­age to the hosts’ prop­erty when parts of the fa­cil­i­ties are oc­cu­pied by guests. Airbnb pro­vides what it calls a “US$1,000,000 guar­an­tee to hosts”. Ac­cord­ing to in­for­ma­tion on its web­site, the guar­an­tee “pro­tects your home and your stuff from ac­ci­den­tal dam­age. Ev­ery host with a list­ing on Airbnb is el­i­gi­ble for cov­er­age at no ad­di­tional cost”.

The guar­an­tee is ac­tu­ally in­sur­ance cov­er­age that pro­tects the build­ings and con­tents against dam­age caused by Guests.

In­juries suf­fered by guests while on the premises for which the host may be legally li­able is in the sec­ond group. Not many per­sons are aware of a law called The Oc­cu­piers’ Li­a­bil­ity Act, 1969. It reg­u­lates “the duty which an oc­cu­pier of premises owes to his vis­i­tors in re­spect of dan­gers due to the state of the premises or to things done or omit­ted to be done on them.”

Sec­tion 3 (1) says “An oc­cu­pier of premises owes the same duty ... to all his vis­i­tors, ex­cept in so far as he is free to and does ex­tend, re­strict, mod­ify or ex­clude his duty to any vis­i­tor by agree­ment or oth­er­wise. The com­mon duty of care is the duty to take such care as in all the cir­cum­stances of the case is rea­son­able to see that the vis­i­tor will be rea­son­ably safe in us­ing the premises for the pur­poses for which he is in­vited or per­mit­ted by the oc­cu­pier to be there.”

A case heard in the Supreme Court in 2006 pro­vides an ex­am­ple of the li­a­bil­ity im­posed by law and an il­lus­tra­tion of one of the many things that can go wrong. A small lo­cal ho­tel was or­dered to pay a guest the sum of $281,490 plus in­ter­est at the rate of six per cent per an­num from Jan­uary 1998 un­der the pro­vi­sions of act. The guest fell while us­ing the bath and suf­fered in­juries. The court ruled that the premises were not “rea­son­ably safe” when the in­ci­dent oc­curred. North Amer­i­can guests are no­to­ri­ous about get­ting some­one to pay when they are in­jured.

Many of the le­gal li­a­bil­ity risks con­nected with be­ing a host can be trans­ferred to an in­sur­ance com­pany.

I sug­gest you contact a rep­re­sen­ta­tive or your in­sur­ance bro­ker to find out what is avail­able and what the costs are be­fore you sign up on the dot­ted line.

To be fore­warned is to be fore­armed — a state­ment that would no doubt res­onate with the Haitian tech­no­crat.

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