140,000 properties risk void insurance with popular rental strategy

“Householders who offer their houses or apartments on short-term holiday rental websites are likely to find they are not protected by home and contents insurance,” said Lisa Kable, spokeswoman for the Insurance Council of Australia.

About 140,000 properties will be listed for short-term rent over the Christmas and holiday period, and the Insurance Council of Australia fears many owners don’t realise they are tinkering with the nature of their property in an insurer’s eyes.

“Owners may not realise that most insurers regard short-stay holiday rental as a commercial use of the property because the likelihood something will go wrong are higher,” Ms Kable said.

“A home building or contents claim incurred while a property is being rented out may be declined, leaving the owner financially vulnerable to financial loss and other liabilities.”

A different type of insurance

There’s a market of insurers that provide products specific to short-term rentals, because there are a host of different liabilities for owners to consider.

For example, these insurance options include covering the property for guest-related accidental or malicious damage, theft or attempted theft, personal liability if a guest sues for damages, identity theft and strata property damage.

Ms Kable also advised householders to ensure they know the details of their current home and contents insurance to avoid being left out of pocket in the event of a public liability claim, or malicious or accidental damage was caused to their property.

“I have heard frightening stories of homeowners returning after short-stay guests have departed to find a completely empty house or that their home has been used for illegal activities. These illustrate the importance of having the right insurance,” Ms Kable said.

Steps you can take

The Insurance Council of Australia recommends taking the following steps before putting a property up for short-term rental:

- Check your household insurance product disclosure statements before advertising your property on a short-stay rental platform;

- If there are gaps in the cover, shop around for specialist insurance that protects home and contents when paying guests are occupying the property;

- Do not rely on the rental platform’s host protection insurance as this will likely not cover the personal property of the host, cash, pets or public liability in shared areas;

- Make sure all your valuables and irreplaceable items are removed from the property during the short-term stay;

- Check your strata rules, tenancy agreements and/or local council laws to make sure short-term holiday lets are permitted; and

- Take steps to make sure the property is safe and secure.