Wednesday, 13 April 2022

As hundreds of thousands of Australians head away for the Easter break, the Insurance Council of Australia (ICA) is warning short-term holiday rental hosts not to place their most valuable asset at risk.

The attraction of earning extra income from short-term holiday rental is financially appealing, but for the uninsured it could lead to disaster.

Almost 500,000 Australian hosts have listed their property on short-term holiday rental platforms since 2016 and Easter and Christmas are particularly popular times to list.

However, hosts who offer their properties on short-term holiday rental platforms are most likely not protected for any damage caused by their short-term tenants under their home and contents insurance.

Most insurers regard short-term holiday rental as a commercial use of a property or a business activity.

A home building or contents claim incurred while a property is being rented by short-term tenants may be declined, leaving the host financially liable and potentially vulnerable to financial loss.

Some insurers have responded to the increasing popularity of short-term holiday rentals by offering specialty policies for hosts who self-manage their property.

Cover like this can be tailored to the number of nights the property is rented and the daily cost can be as little as the price of a take-away coffee.

It can cover paying guest-related accidental or malicious damage, theft or attempted theft, personal liability if a guest is injured, identity theft, and strata property damage.

Short-term landlord insurance policies are also available to cover a professionally managed property.

Hosts considering short-term holiday renting should:

• Check their building and contents insurance policy details prior to advertising on short-stay holiday rental platforms. If the policy doesn’t cover short-term rental look for a specialty policy at findaninsurer.com.au that protects both home and contents while paying guests are staying.
• Not rely solely on the rental platform’s host protection insurance as there may be gaps in the cover offered.
• Be aware that home insurance includes public liability coverage, however, the commercial activity of short-term holiday stays may invalidate this cover for some claims.
• Reduce the risk of theft by removing valuables during the short-term stay.
• Check strata rules, tenancy agreements and local council laws because these may prohibit short-stay holiday rental.
• Ensure their property is safe and secure.

Quote attributable to Andrew Hall, CEO ICA:

Short-term renting is a legitimate and attractive activity that turns many homeowners into short-term landlords, but it’s vital that they do this properly and have insurance cover for the unexpected.

The Insurance Council is aware of frightening stories of hosts returning after short-term paying guests have departed to find their house stripped of possessions or significantly damaged.

Short-term rental landlords wouldn’t leave home without locking their property – this Easter they mustn’t leave home without the right insurance cover.