Airbnb and insurance, it’s not what you think

Airbnb has opened hospitality to the masses but there are unforeseen risks.

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The benefits of using Airbnb to let property are myriad but many homeowners and their brokers don’t consider the insurance implications of using this hospitality service.

The average South African homeowner rents his or her home on Airbnb for 16 days per annum and earns R28 000 from this service, according to Airbnb statistics; Airbnb generated roughly R2.4 billion in total economic activity across South Africa in 2016. It is big business but there are risks attached to opening your door to foreign guests.

Read more: ‘Open architecture innovation’ will drive new growth

Say, a young couple in Ballito, KwaZulu-Natal, let their home to guests in December, while staying with family during this period. The homeowners will earn an extra R115 000 in income for the five weeks that guests stay in their home.

What happens if the property is damaged or valuables stolen? Even worse, what if the guests burn down the house?

Evidently, many Airbnb hosts simply assume they would be covered by a household insurance policy should this happen – it is not the case.

“Cover is most likely to extend only to the policyholder or family members who normally live at the residence and won’t pay out if something happens while a third party resident is living in their home,” explains Kim Henderson of Bidvest Insurance.

Furthermore, if an Airbnb guest steals from the host, he or she will not be able to claim from insurance as there would be no evidence for the use of force or violence.

“Some insurance companies also consider the rental as a business activity, which may be grounds to decline a claim in respect of any death, injury, illness, loss or damage caused,” says Henderson. 

What’s a broker to do?

The onus lies with brokers and underwriters to make clients aware of the perils of non-disclosure and to ask the question at renewal. 

Henderson suggests that clients who host properties on Airbnb should have guests sign an agreement that they accept responsibility for any loss or damage caused.