Does your insurance policy cover short term rentals?
Sean Pretorius, COO at RBS.
What to know when renting out your home to holiday makers.
The festive season is synonymous with travel, with many choosing to take a holiday or visit family and friends over this period. Due to the many additional expenses incurred over this period and the number of short-term accommodation rental websites on the rise, it makes sense for homeowners to rent out their homes to holidaymakers for extra income.
However, according to Sean Pretorius, COO at Risk Benefits Solutions (RBS), one of South Africa’s largest independent insurance and risk specialists, should homeowners not have the correct insurance policies in place they could encounter significant financial loss.
He warns that traditional home insurance doesn’t provide cover for incidents and theft that may occur while the home is being rented to strangers.
He says that the wide variety of host services, such as Airbnb, have made it easier and more convenient for local homeowners to open up their homes to travellers looking for accommodation. “While such platforms offer numerous benefits, such as not having to leave the property unoccupied and vulnerable to a break-in, it also comes with its own share of potential risks and homeowners need to ensure they are protected.
“Short-term letting generates revenue for the homeowner, and as a result is technically a commercial venture. As such, more complex insurance cover is required to insure the associated risks. For example, traditional bed and breakfasts (B&Bs) make use of commercial insurance cover, which is more comprehensive when compared to insurance for household contents.
“Homeowners are hosting travellers with different and unknown habits and behaviours. Upon returning from a holiday, home owners may find items missing, or that part of the property has been vandalized or damaged. Such scenarios need to be taken into account for insurance purposes as theft cover on a traditional personal policy requires forcible entry. Therefore if stolen buy a guest, the cover would not respond.”
He adds that apart from protecting physical possessions, homeowners also need to ensure that they have liability cover in place. “Should a guest injure themselves on the property during their stay, the owner could be held liable, and claims brought against them may have cost implications for the owner.”
Pretorius encourages homeowners planning on letting their homes out this holiday season to carefully read the terms and conditions of their insurance policies, and to make sure that they understand the extent to which their property is covered.
“As policies differ, it is advised that homeowners contact their insurance provider to ensure that they have sufficient cover in place. Not only will this assist in avoiding unnecessary surprises when returning from holiday, but it will also provide peace of mind for homeowners,” concludes Pretorius.
