Check your insurance cover before renting your house out over the holidays

Homeowners looking to rent out their properties over the festive season must ensure they are properly insured to protect themselves from losses incurred through theft or damage. That is the advice of Paul Goodall, technical and special projects manager at Lion of African Insurance Company.

“The key is letting your insurance company know of your plans to have a tenant in your house,” says Goodall. “Keeping your insurer informed of your changing situation and discussing how this affects your cover is the best way to ensure that you are protected from possible losses.”

He says it is important to differentiate between home owners insurance, which covers the structure of your home, and household contents insurance, which covers the contents of your home.

A home owner’s insurance policy is a fairly standard policy that insures the buildings of the residence and all permanent fixtures and fittings against major hazards, such as storm damage, fire, hail etc. It does not cover the contents of the house. These are usually covered separately.

Home owner policies generally allow for the fact that a house may be let, and that any act or omission on the part of the tenant will not invalidate the insurance provided that, if the owner finds out that the tenant is doing something which could invalidate the cover, it is brought to the insurer’s attention.

The household contents policy, however, does not contain a similar provision and could be invalidated by the actions of the tenant. An obvious example is if the tenant decides to build a braai in the living room.

“Another example is if the tenant decides to run a business from the property. In this situation it would be advisable to notify the insurer, who will most likely re-evaluate the hazard and potential liability and possibly increase the premium somewhat,” explains Goodall.

“People tend to try to avoid this potential premium increase by not informing their insurer. However, most of the time, the increase isn’t as substantial as anticipated, and could save a lot of money in the long run.”

Both the home owners and the household insurance policies usually provide that, if a property is let, theft is only covered if it is accompanied by forcible and violent entry or exit. It is therefore important to ensure that you would be protected in the event that the tenants steal your household contents.

“Informing your insurer of your decision to let your property is unlikely to increase your premium significantly; if at all. In fact, some insurance companies consider that renting to three or less people does not constitute letting or subletting at all. However, it falls to the owner to check their policies to make sure that their insurance is not limited or restricted,” suggests Goodall.

For those who are renting their houses out to holiday-makers, they no doubt worry about large and unruly parties being thrown in their homes. “Some tenants don’t show the same respect for your household contents as you would. If tenants damage the furniture, household insurance may not cover this as it could be considered accidental damage,” says Goodall. “It is therefore prudent, when letting out your property to groups of people, to check that you have accidental damage cover.”