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Hello airbnb guests… goodbye insurance cover?

By Lia de Sousa on

The boom in short-stay internet accommodation sites like Airbnb has led to more and more Australians opening their doors to people they don’t know. But what happens if something goes wrong?

Lia de Sousa, Whitbread’s General Manager | Strata, checks out what can happen at your strata property after strangers check-in.

Increasing numbers of apartment owners are leasing their homes via Airbnb on a short term basis. 

Whether gallivanting around Europe for 5 weeks or skiing in Japan, the fact is, most homes sit empty while owners venture off overseas. Many see this as the perfect opportunity to give Airbnb a go, making a little extra money on the side while they travel. It could even pay for much of their overseas trip!Capture

Sounds wonderful, right? We think so too. However, before taking the Airbnb plunge, there is one very important thing to remember when it comes to insurance:-

Take this claim scenario for example: Check your Contents Insurance policy conditions to ensure you have insurance cover.

Kate and William let their apartment out to a couple via Airbnb while they travelled to London for six weeks to visit their son.

They returned from their holiday to find their apartment trashed, and their entertainment system worth more than $15,000 gone.

Bad turned to worse when they tried to lodge a claim under their Contents Insurance policy and it was denied in full.

Why insurers can deny a claim... 

1. Non-disclosure 

When entering into an insurance contract, you are required to notify the insurer if there is any change to your circumstances, as this may affect your insurance cover. A contents policy for example, will generally not cover possessions when the property is being used for short-term letting. Failure to notify your insurer of a change in living conditions could be considered a breach of the contract, and as such your policy can be voided, or claims denied, leaving you exposed.

2. No evidence of forced entry 

For theft of contents to be covered, many Contents Insurance policies require clear evidence of “break and enter” in order to respond. In the instance above, Kate and Will willingly gave their keys to a short-term tenant, and as such there was no sign of a break and enter when their home entertainment system was stolen.

3. You are making an income 

Your insurer may perceive Airbnb short-term letting as ‘carrying out a business activity’ within your home. This may void your cover, as the intention of a domestic Contents Insurance policy is not to cover business activities in the home.

Evidently, you can be exposed to significant financial losses should your Contents Insurance policy fail to provide cover when letting an apartment through Airbnb or another peer-to-peer leasing site. BUT, if you still think Airbnb is for you, we urge you to follow our 5 recommendations to help protect your assets.

5 key recommendations:

  1. Do your homework – read reviews on prospective tenants to make sure they have a clean rental history on Airbnb

  2. Before committing your property to Airbnb, notify your insurer immediately. 

  3. If your insurer agrees to provide Contents cover despite changes to the property circumstances, request the insurer’s confirmation of cover in writing. 

  4. If your insurer chooses not to provide Contents cover for short-term letting, we strongly recommend speaking to your insurance advisor to obtain alternative coverage. 

  5. Obtain clarification from your insurance advisor on what the strata building insurance will cover. Each policy will vary regarding specific exclusions, and inclusions, and property owners should be well informed before opening themselves up to any potential asset exposure. 

Is there an insurance solution?

You will be pleased to know that the insurance market has changed markedly since Airbnb first burst onto the scene.

Select insurers are now offering insurance solutions specifically designed to protect against the Public Liability and Contents exposure of Airbnb short-term leasing in strata properties.

For specialist assistance in placing quality insurance cover to protect your property assets, contact Whitbread Insurance Brokers. 

T  1300 424 627 | E

Whitbread Contact Us

This article was originally featured in Title magazine. This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

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