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Does Landlord Insurance Cover Self Managed Holiday Rentals like Airbnb?

When choosing to become a holiday rental host on platforms like Airbnb and Stayz or similar, there’s often an element of confusion as to what insurance covers damage caused by guests.  Is it landlord insurance or home and contents? At first glance you may feel like home and contents insurance will cover you for any damages, but unfortunately, this isn’t the case.

Setting up and hosting a self-managed holiday rental appeals to many with spare rooms or empty houses. The excitement and belief that they will make a bit of extra money on the side often overshadows the amount of time they spend researching the costs and risks involved.

In this blog, we’ll explore landlord insurance and how to make sure your Airbnb or holiday rental property is sufficiently covered, giving you peace of mind that you have complete coverage from problematic guests, unexpected repair costs and other curveballs thrown your way! Having the correct type of insurance is important so you’re not out of pocket in the long run.  

 

What is landlord insurance?

Landlord insurance is a specific type of insurance policy designed to protect those who own investment properties from the risks that come with renting it out.  A landlord policy will generally be applied to properties that are subject to lease arrangements of three months or more.

According to Savings.com.au, landlord insurance may cover you for the following things:

  • Damage or theft by tenants or the tenants’ invited guests
  • Loss of rent due damage to the property
  • Rent default
  • Legal expenses taking tenants to court
  • Liability claims made against the landlord
  • Damage done to the building structure as a result of fires, storm damage, floods, vandalism etc.
  • Damages to contents (curtains, light fittings, carpet etc) as a result of fires, storm damage, floods, vandalism, etc.

 

While these are some of the inclusions that may be covered in landlord insurance, some other things that often sit outside these guidelines. These may include:

  • Damage done to the property yourself
  • Damage caused by insects or rodents
  • If you breach the rental agreement instead of the tenants, and more.
  • Damage caused by pets
  • Any parts of the property you don’t rent out (for example, if you’re living in a room of the property, this might not be covered)
  • General wear and tear

 

Does landlord insurance cover Airbnb?

While Airbnb and other similar providers are essentially a rental platform for your property or room, landlord insurance may not respond if you have not declared usage of your property for stays shorter than a few months.  

If you’re wanting to rent your space as an Airbnb, it’s crucial to make sure you always read the fine print to determine whether you’re adequately covered if you’re only renting out for a few days or weeks at a time.

If you’ve taken out landlord insurance but haven’t checked to see whether your policy covers short-term rentals, it’s time to ask questions and be transparent with your insurer about what you’re planning on doing – just in case you’re not covered. Some policies will actually be voided because short-term tenancy will be viewed as carrying out a business.

Other insurance options like home and contents insurance will only (as the name suggests) protect your home and the contents in it when being used for your own domestic use. It is still vital you have this insurance to protect your home from other problems that may occur, as well as landlord insurance policy that will accommodate usage of your property for short term stays.

At ACS Financial, we’re proud to be one of the few Insurance Brokers offering access to landlord insurance options that include short-term rental spaces and Airbnbs. We provide this access to comprehensive cover to put your mind at ease knowing you’re safeguarded from things going wrong.  

 

The ugly truth

Shockingly, 54% of Australian hosts are unaware of how their home-share activities are covered by their insurers. This means that if something were to go wrong, many could be exposed to uninsured risks and substantial out of pocket expenses.

Some terrifying examples of home share horror stories include:

Jane and her Rosebud home

Jane had an unfortunate run in with an Airbnb guest. She didn’t have landlords’ insurance but agreed to rent her place out to a guest who turned out to be at the top of the police’s ‘most wanted’ list. He used her place to manufacture ice and trashed the house, with huge chunks of the wall been taken out, damaged furniture, smashed shelves and more which cost her thousands to fix.  

Altona beach house

A double-story house on the Altona Esplanade was booked for a short weekend stay that went horribly wrong. A huge party was thrown resulting in multiple noise complaints and police visits. The owners returned the next day to smashed windows, vandalised fittings, plaster ripped off walls and doors torn apart – the damage bill was in the thousands.

New Year’s Eve Nightmare

Luckily, an Ocean Grove woman in 2018 learnt a valuable lesson about insurance. A party at her Airbnb on New Year’s Eve turned into a $14,000 disaster when someone with a handful of sparklers tripped over and put scorch marks all over her floor. What she thought was going to be a cheap bill didn’t go quite as planned. What was initially thought to be a relatively cheap repair in fact required her whole floor needing to be ripped out leaving her with a nasty repair bill.  Fortunately, she had done her insurance research and had a policy that covered the damages caused.

 

Although these horror stories may cause some hesitation in your mind, we haven’t included them to scare you! Simply, to inform you to make the best decisions possible when it comes to short-term rental options like Airbnb and Stayz style accommodation. Knowing that you’re protected if the worst were to happen will give you the peace of mind to rent out your place. Before entering into anything like this, research is key to help you decide if this is right for you.

 

When deciding to offer your property for short term rental, it’s important to ensure you’re insured correctly to protect yourself and your property from any damage or incidents that may occur when you have guests spending time there. If you wish to talk to someone about landlord insurance which will allow for short-term rental, get in touch with us today.