Insurance implications for renters and lessors during the festive season

Christelle Fourie-Colman, Chief Executive Officer of MUA Insurance Acceptances.

With this year’s festive season around the corner, most consumers are already preparing for their holidays. However, holidaymakers often forget to check that their short term insurance policy will cover their possessions during this period, whether they are at their own holiday home, renting a hotel room or letting out their own residential property on AirBnB.

This is according to Christelle Fourie-Colman, Chief Executive Officer of MUA Insurance Acceptances, who states that insurance is usually the last thing on people’s minds as they relax and take down their guard during the holiday season. “It is vital that consumers speak to their insurance provider or broker before they embark on their vacation to ensure that they won’t be left out of pocket during the time that is meant to be stress-free.”

She says that when a consumer is renting a home for the holidays from another homeowner, it is imperative to have a discussion with the homeowner prior to arrival to determine what they expect of the occupants. “It has to be decided upfront who will be held liable in the event of a break-in or robbery happening at the premises during the tenants’ stay. In most cases the homeowner should have sufficient insurance cover in place, but in most instances the occupants will be held responsible for theft or damage to their own goods and will therefore need to ensure they have their own insurance.”

Consumers will need to check with their insurance provider whether they are fully covered in the event of belongings being stolen or damaged while occupying a residence that is not listed as their permanent residency, advises Fourie-Colman. “There are also many occasions where two or more families rent one home collectively in an effort to save costs. In most of these cases each person or family will be responsible for their own personal belongings.”

She says during the holidays consumers are also more relaxed and at night might forget to lock some of the rental house’s doors or windows and could even forget to set the alarm before they go to sleep. “If the insurance policy clearly stipulates that all doors should be locked and the alarm must be set, the homeowner could face insurance claim repudiations if the requirements are not adhered to.”

She explains that the homeowner cannot be held liable for the occupants’ negligence. “The homeowner will be in their rights to hold the tenants liable should a burglary occur and investigation proves that the alarm was not set properly. Therefore it is imperative that the homeowner and tenants have a serious discussion about insurance requirements and liability before the tenants occupy the house.”

Fourie-Colman says that when it comes to liability regarding injury on the property, the onus is on the homeowner to ensure that the property is maintained in a good condition and free of any hazards which could cause injury or harm to the occupants. “Any visible defects in the property must be drawn to the attention of a tenants.

“In addition, consumers who buy expensive gifts for their loved ones as Christmas presents should also be sure that these items are included in a sufficient All Risk policy. This will ensure that the consumer will be able to claim from insurance should the gifts get damaged or stolen while they are still on holiday. It is also advisable to consult an insurance broker about these expensive items to ascertain whether it should be specified in the consumer’s insurance policy to ensure proper cover.”

She advises those who plan to stay at their holiday home and rent their residential home out on AirBnB during the holiday to also ensure that their insurance policy will cover any damage to their property. “It is imperative that these homeowners make contact with their insurance provider to inform them of the arrangement. Not all insurance policies are created equal and many exclusions may apply when renting out a property.”

Another major problem for homeowners renting out their property is that most homeowner’s insurance policies will require visible and forcible entry in order to pay out for any theft while guests are renting the home, add Fourie-Colman. “This is why it is a good idea to have a written and signed agreement with the lessee so that they are made aware that they will be held liable for any stolen or damaged items if there are no signs of forced entry.”

Some policies offer cover for the personal belongings of guests, which is a good idea as the homeowner does not want to be held liable for stolen or damaged belongings in the event of a burglary or disaster, such as a fire, she adds.

“It is advisable that consumers make contact with their insurance broker ahead of the vacation to ensure that they will not be suffering from any insurance blues this holiday, no matter what their arrangements will be,” concludes Fourie-Colman.