Risk Involved in Short-term Home Rentals

The latest Mutual and Federal newsletter contains an article by SA Property News of interest to brokers and their clients who make use of facilities like AirB&B to rent out their houses and flats on a short-term basis to earn additional income.

Attie Blaauw, head of personal lines underwriting at Santam says: “When you decide to accept payment for accommodation in your residence – or on your property – there are a number of risks you need to take into account.”

“Prospective holiday home owners are often unaware that such liabilities can translate to costly medical attendance or treatment for which they may be held responsible,” says Blaauw.

Damage or losses caused by paying guests as a result of negligence – such as leaving the house unlocked when going out – could mean the difference between having your claims paid out or not. In the past, Santam has dealt with claims where letting agents did not do their due diligence properly and the tenants were found to be guilty of causing damage to the property.

Although rental entities such as AirBnB do offer a ‘host guarantee’ or ‘host protection’ insurance, a careful review of the terms and conditions is advisable. Blaauw says you should study your insurance policy very carefully to ensure you have proper liability cover in place and that there are no exclusions that could cost you down the line.

“Many insurers exclude malicious damage to property and theft if the residence is lent, let or sublet to tenants. It is very important to check what you are covered for, before you decide to rent out your property.”

Mishaps can very easily turn a much anticipated holiday break into a bad experience for any traveller, but could also turn into an expensive outlay for the property owner concerned.

“Ensuring that the right liability insurance cover is in place before letting your property provides security and peace of mind for you and your prospective guests. Speak to your broker or contact your insurer to make sure you have the proper insurance cover in place for your home if you’re going to rent it out,” says Blaauw.

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