Insurance in the age of Airbnb

By: Indwe Risk Services

Airbnb has arrived in South Africa in a big way. In fact, since its launch in 2008, the lodging marketplace has grown to more than 150 million users with listings in almost 200 countries. However, for locals looking to rent out their properties, there are insurance implications to consider, says Joe Szemerei, Executive Director: individual & volume business  of Indwe Risk Services.

“It is critical for any host to carefully review their policy and clarify exactly what they are covered for. Just as Uber impacted car insurance, so too does Airbnb change how household insurance should be viewed,” he says.

This directly impacts not only the household goods and the house owner’s sections, but also tenant’s behaviour, and other liability concerns.

Fundamentally, the policy must reflect the fact that the residence is hired out. This will likely result in an additional excess being payable for all claims that are made as a result of theft, attempted theft, or malicious damage whilst the home is unoccupied. Furthermore, malicious damage caused by anyone living in the home or outbuilding is excluded from a policy.

“And when it comes to theft or attempted theft, claims are subject to visible signs of forced entry or exit from the insured property. Where things become more complex, is when the tenant’s behaviour must be factored in,” he says.

Fortunately, if a tenant living on the property acts in a way that would normally make the policy invalid, all is not lost. The owner could still be compensated if certain conditions are met.

These include not knowing or agreeing to the tenant’s action or omission if something has been broken or stolen. However, it is critical that the policy owner must inform the insurer about the action or omission as soon as they find out about it.

Finally, if the rejection of the claim was not due to fraud, dishonesty, misrepresentation, or any event deliberately caused by the insurer, then the policy will still be honoured.

“People must remember that insurers do not compensate for liability related to the policyholder’s employment, business, or profession. So, it is important to understand the distinction, if being an Airbnb host is that person’s sole income,” he says.

If you are uncertain about anything or would like to re-evaluate your cover, please speak to your Indwe advisor for all your risk profile requirements.