IN THE KNOW

Insurance for Airbnb Lets – Make sure you're properly covered

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If you're thinking about letting your home via Airbnb, you'll be interested in what the New Zealand Insurance and Financial Services Ombudsman, Karen Stevens, has to say about it. She has given a timely warning about the insurance implications of Airbnb lets, and it makes a lot of sense to take notice. Here's what you need to know about insurance for Airbnb hosts.

Don't panic – No Ombudsman complaints received yet
On the bright side, so far Karen Stevens hasn't had any complaints about Airbnb insurance claims coming through. Although she is seeing claims come through, they're being honoured by the insurers... so far. But she and her staff are keeping an eye on the situation because they suspect many home owners haven't even thought about insurance, never mind told their insurer what they're doing. It's such a casual thing to do, millions of us do it, and because Airbnb in particular and the sharing economy in general are relatively new trends, we don't fully understand all the risks yet.

Airbnb's host guarantee – A good thing but not always comprehensive enough
Airbnb has a host guarantee, and it gives you some protection against damage caused by guests. But it probably isn't comprehensive enough, and it certainly isn't good enough to replace proper insurance cover. At the same time we're hearing terrible stories about the things some guests do, including burning a house down because they didn't know how to safely deal with the ashes from a fire. We expect to see a lot more of these as the trend spreads.

A challenge for the insurance industry

It's our industry's job to figure out the risks people face – both guests and hosts – and decide whether they belong in a commercial or personal insurance policy. The lines are blurring. A basic house insurance policy, for example, covers hosts as long as their guests are ordinary friends and family, not complete strangers. So far there isn't a specific Airbnb insurance policy for either guests or hosts. We think it's only a matter of time, but meanwhile we're offering some practical tips to people in our region who want to Airbnb their homes.

Insurance advice for Airbnb hosts

• Bear in mind you might not be legally allowed to let your flat or apartment via Airbnb – the freeholder might outlaw it
• Tell your houseowner insurer or broker about your plans. They will probably cover you for short-term, one-off rentals, for example while you're away on holiday. But if it's a regular or frequent thing you will need a landlord or commercial policy rather than a householder one
• Alternatively, your insurer might decide to change the terms of your policy if they think there's an increased risk to your home contents or the building itself. If so, they can either charge you more to cover Airbnb lets, or refuse to cover Airbnb lets but let you keep your policy
• If you don't tell your householder insurer, you risk causing a breach of one of the important principles of insurance, 'utmost good faith'. It's unlikely they'll pay a claim simply because you didn't tell them your plans, didn't 'disclose' them. They might even 'void' your policy altogether, leaving you without cover
• There is also a householder policy exclusion to think about. You are not covered if the premises is unoccupied or vacant for 60 or more consecutive days
• Traditional rental policies might not cover you either – check before you buy, or ask us and we'll talk things through with you. If you've been letting your property permanently then switch to Airbnb-style letting, your rental policy might not cover you. It seems fair since Airbnb and a 90 day tenancy are very different insurance risks
• Your homeowner policy probably includes Accidental Damage caused by fire, lightning, special perils, theft and burglary. It protects your purse against the cost of accidental damage caused by people invited into your home, including Airbnb guests. Do you have it? If not, it's a wise move. Call your insurer, or us, and add it on if you can. The cover may come with an excess, a deductible – an amount you pay before the claim kicks in
• Bear in mind that you can't buy insurance against deliberate damage
• Buy liability insurance to protect your finances in case someone gets hurt or killed on your property and the matter goes to court'
  
• Be a considerate host

Sensible personal precautions to take

There are also things you can do yourself to manage the risk. Here are our insurance-inspired Airbnb safety tips for hosts.

• Leave clear written instructions for guests about how to use your home – there's a lot of power in an actual piece of paper, actually left in the house, that people can pick up!
• Never leave valuables in plain sight. Remove anything valuable and portable, and store it somewhere safe under lock and key. It matters because you won't be covered if someone you have invited into your home steals from you. There's a homeowner policy condition that says loss or damage by theft /burglary is covered but only if it involves actual, forcible and violent breaking into or out of a building, or any attempt to do so
• Lock any doors and windows that you don't want your guests to open
• Fit smoke alarms and Carbon Monoxide alarms to keep your guests safe
• Always use the Airbnb messaging service so you're safely within the system
• Use all of the Airbnb website safety and security features - always look at guest profiles and reviews, never accept guests who don't have good reviews, check social media profiles, and check contact details to make sure they're real and accurate
• Always take a security deposit from your guests, which you can keep if there's minor damage – you can use it to cover the policy excess or deductible

Insurance-related advice for Airbnb guests

• Take a photograph of the home when you first arrive, so you can make sure you leave it in the same condition, and when you leave, in case you need to prove you left it in good condition
• Check every aspect of the host on the Airbnb site, and check any other recommended sources of information and verification so you know they're good hosts
• Always use the Airbnb messaging service so you stay safely within their system
• Buy travel insurance – it'll cover you for accidents, injuries, lost baggage, stolen items, all sorts of relevant risks
  
• Be a considerate guest

Your first steps to making a claim

Your first step, if your home or contents have been damaged by guests, is to check to see if it's covered under the Airbnb host guarantee, which pays out a maximum of USD$1 million. If not and you have to claim on a householder, commercial or landlord policy, and you bought that policy through us, we'll be glad to help you with your claim and do everything we can to get it paid quickly and fairly. The same goes if you've bought travel insurance with us and want to make an Airbnb-related claim. It's all part of the service!

Posted on 8 October, 2018 Reading times 5:15 mins