Renting out your house?
BEFORE YOU DO: THERE ARE FOUR IMPORTANT INSURANCE CONSIDERATIONS
You need to find out how airbnb-ing your property may affect your risk profile and premiums.
It’s December and many homeowners are preparing to rent out their primary or secondary residences via Airbnb. Airbnb has provided landlords and homeowners alike with the opportunity to make an income from connecting directly with guests looking for a comfortable location to stay in South Africa.
There are important home insurance considerations that hosts need to consider before embarking on a rental agreement.
Airbnb provides protection to its hosts by covering “up to $1 million (about R14 million) for damages to covered property. This in the rare event of aguest damages above the security deposit or if no security deposit is in place”. This 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, you’re covered.
The Host Guarantee Programme 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 Programme doesn’t cover cash and securities, collectibles, rare artwork, jewellery, pets, or personal liability. We recommend that hosts 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.”
This means that if you don’t currently have home insurance or household contents insurance in place, it is highly advisable to do so before you open your doors to potential guests.
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. In the unfortunate event that you need to claim, it’s always better that your insurer is aware of the rental.
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. To help combat this, have 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.
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.
It’s critical to understand all the ins and outs of renting your property out for any period – be it a couple of days or a couple of months.
Travys Wilkins is from CompareGuru