Rental boom brings new insurance risks – and a call for adviser action

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South Africa’s residential rental market is enjoying a significant upswing, with national rental growth reaching 5.6% in the first quarter of this year – the strongest quarterly increase in nearly eight years, according to the latest PayProp Rental Index. For financial advisers and insurance brokers, this signals not only opportunity, but the need for proactive client education and tailored policy guidance.

Ryno de Kock, the head of distribution at PSG Insure, says as demand for rentals grows, so does the number of properties leased, repurposed, or listed on platforms such as Airbnb. But, he adds, many property owners and tenants do not understand how furnishing levels directly impact their insurance needs.

Unfurnished rentals: clarify cover responsibilities

Advisers should guide landlords to secure building insurance that protects against structural risks – such as fire, plumbing faults, or storm damage – and ensure a public liability extension is included to cover third-party injuries or damage due to property negligence.

A common pitfall is misunderstanding liability exposure.

“If a landlord does not maintain the property appropriately, and a roof tile is blown off by the wind and damages a vehicle, the property owner must have the necessary liability cover in place to cater for these damages,” says De Kock.

For tenants, advisers must emphasise that the landlord’s policy does not cover their belongings. Educate renters on the importance of contents insurance to protect personal items such as electronics and appliances, particularly from secondary damage (for example, a geyser bursting onto a laptop).

Semi-furnished properties: clarify inventory and responsibility

For semi-furnished rentals, landlords often include major appliances or basic furniture. Advisers should recommend that landlords either insure these items under a contents policy or shift the risk to the tenant through the rental agreement. In both cases, a detailed inventory with replacement values is essential.

Most property owners will include these items as part of the rental agreement, where each item should be documented with its replacement value.

“This will normally shift the responsibility of insuring these items onto the tenant, which can be held liable for these items when the rental agreement ends.”

Advise tenants to carefully document their own high-value items and consider all-risk cover if those items are taken outside the property.

Furnished properties and short-term lets: higher exposure, greater risk

Fully furnished rentals – particularly those listed on Airbnb – carry increased insurance complexity. Advisers should recommend a comprehensive contents policy covering all items at current replacement value. Ensure clients understand that most standard policies exclude guest-related losses, particularly theft without forced entry or damage by short-term occupants.

De Kock emphasises the importance of tailored policies: “From bed linen to TVs, everything should be insured at current replacement value. If you’re hosting on Airbnb, make sure your policy covers multiple addresses if you have multiple risks. This will include your home and the rental property – if applicable,” he says.

Advisers should also highlight that standard domestic policies may not cover liabilities related to paying guests. Clients renting out guesthouses or short-term lets need commercial liability insurance. This becomes even more crucial with international guests, where claims may be made in foreign currencies.

Where meals are provided, advisers should ensure product liability cover is in place. Additional cover may also be needed for staff-related incidents, such as injury to a guest caused by an employee’s actions.

“If you’re renting out the property as an Airbnb,” says De Kock, “it’s crucial that the property owner provides the necessary disclaimer to guests that the B&B or Airbnb cannot take responsibility for their items, and the guest should take extra precautions when leaving them unattended.”

Tailor the conversation

For advisers, the key takeaway is the importance of tailored advice based on property type, level of furnishing, and rental model. This includes helping clients:

  • understand the limits of standard home insurance;
  • recognise exclusions in short-term letting scenarios;
  • avoid underinsurance on contents or liability; and
  • ensure clear policy documentation for shared or tenant-managed risks.

“With the right policies and expert advice, property rentals – furnished or not – can be an extremely lucrative venture in today’s market,” De Kock says. “The key is understanding the specific risks you face and tailoring your cover accordingly.”