Horses for courses – the right landlord cover for short-term rentals

What started out as an opportunity to rent out a room in a home to a guest for a couple of days and earn a few dollars has turned into a business for many property owners – effectively making them landlords.

Being a landlord poses some great opportunities – and also some risks. Chief among these is a failure to properly insure the property.

Although accommodation platforms like Airbnb usually offer some form of property damage protection, many hosts rely on their usual home and contents insurance as backup. However, many of these policies won’t cover claims if the property is being used as a business (that is, being used to generate income).

What owners often don’t realise is that they can safeguard their investment with a short-term landlord insurance policy which offers protection against a range of risks not covered by standard home insurance.

A word of caution: not all landlord insurers offer short-term policies and some specifically exclude Airbnb.

Policies designed for the short-term rental market usually offer comprehensive contents cover for items including game consoles, entertainment equipment, linen, crockery and cookware. The policies can also cover damage caused by tenants or their guests, whether the damage is accidental or malicious.

The short-stay accommodation market is also proving popular with landlords who usually lease out their investment properties for a fixed term.

Many owners, especially those with properties in the inner city or popular holiday destinations, are finding that the income they can make from the short-stay market can be lucrative.

In fact, recent analysis by a comparison website found the average weekly Airbnb rent for a two-bedroom unit near an airport or located in a major city was almost triple the rent the property would fetch on a traditional rental basis.

Heads up: If you are looking to switch from fixed-term leasing to short-term, you will also need to switch your insurance.

The risks facing landlords renting out property on fixed-term leases are not the same as renting the property for holiday lets – that’s why there are specific landlord insurance covers for each situation.

For example, unlike fixed-term lease policies, cover for loss of rent (except in certain situations) may not be applicable for short-term policies.

Ensuring you have the right insurance for the type of lease arrangement is one way that can help protect your investment. So whether you need cover for Airbnb hosting or regular holiday lets, there are short-term landlord policies which may suit you.