Airbnb insurance tips
Events across the Tasman highlight risks of the sharing economy.
New Zealand’s Insurance and Financial Services Ombudsman is warning people should take care with their insurance cover if they let their homes via Airbnb this summer.
Many homeowners did not appear to be thinking about insurance before they listed their homes, or baches, on Airbnb, said ombudsman Karen Stevens.
Although Airbnb offers a host guarantee to provide some protection for damage, Stevens said that might not be comprehensive and it did not replace insurance.
Richard Godman of Vero said a basic house insurance policy covered owneroccupiers on the assumption that only close friends and family would be invited in.
‘‘But listing a home on Airbnb opens the door to strangers staying in the family home, and the risks that come with not knowing who your guests are.’’
Contact your insurer and check your policy
Usually, a standard house and contents policy will cover short-term, one-off Airbnb rentals, such as a three-week stint while you’re away over summer.
But if you’re letting in a more serious way, you might be required to change policy from residential to landlord or commercial, and EQC cover might no longer apply.
If you’re in a block of flats or an apartment, your body corporate arrangement might not allow you to rent out your home.
‘‘Policyholders have a responsibility to tell their insurer about any change in circumstances that may increase the risk, said Rebeka Tregonning of IAG. .
‘‘If people fail to notify their insurer that they’re renting out their home, even temporarily, they might find themselves in breach of their policy which could result in them not being covered at all.’’
She said she was not aware of any Airbnb claims that had been turned down – but Airbnb owners had claimed. In one case, a house was rented to foreign tourists who were not familiar with open fireplaces. They disposed of ashes incorrectly and the house burnt down.
Switching to an Airbnb-style arrangement if the property has previously been rented on a more permanent basis might mean an adjustment of cover, too.
Temporary rentals had more visitors and fewer checks compared to normal tenancy agreements, Godman said.
‘‘Landlord cover often contains conditions around how you select and inspect your tenants that you’re unlikely to be able to meet through platforms like Airbnb.’’
Ask about accidental damage cover
Most house insurance policies will provide cover for accidental damage caused by anyone who has been invited into the home, including Airbnb guests.
Damage caused by paying guests is often also subject to an extra excess. But deliberate damage is unlikely to be covered at all.
You may also find you are not covered for any meth contamination if it occurs. Tregonning said some insurers now explicitly excluded the cost of cleaning up methamphetamine contamination in short-term rental situations.
Keep your home secure
To maintain your cover you must exercise ‘‘reasonable care’’, Stevens said. Lock doors and windows, install smoke alarms and check they are working, check wiring, appliances and heaters, and inspect the house regularly. Also keep the house and gardens neat and tidy, and empty the letterbox.
Watch belongings
If there is a theft by someone lawfully on your property, you won’t be covered. Lock your jewellery and valuables in a safe, or a secure location.
Protect yourself ...
The Airbnb site has features, including guest profiles and reviews. Steven suggested property owners ask for a security deposit to cover minor damage.
... and your guests
Check your liability for the people renting your home. Adam Heath, executive general manager of portfolio and product at Vero, said in some circumstances, if a guest was injured in a property, the owner could be required to cover some of the costs of their medical care or loss of income.
Claiming
In the event of damage, the first step was to check whether it was covered under Airbnb’s host guarantees, which covers up to $1.3 million, Heath said. If it applies, you might not need to claim on insurance at all. It was not worth trying to conceal the fact that a property was let at the time of the loss.
‘‘If you do claim on your insurance policy, make sure you’re honest at claims time about the circumstances of the claim. If you’ve been hosting, the excess on your claim may be a little more, but the cost of having your claim declined could be far higher.’’