An insurance body has reminded investors that use short-term letting platforms are placing assets and financial stability at risk if they do so without the proper insurance.
According to the Insurance Council of Australia, over 140,000 property owners are placing their dwelling at risk by not having the adequate level of insurance.
“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, spokesperson for the Insurance Council of Australia’s Understand Insurance initiative.
“We conservatively estimate more than 140,000 properties that are usually either owner-occupied or rented out long-term will be listed for short-term rentals these holidays.
“However, 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.”
If a dwelling owner attempts to make a claim, Ms Kable said, since short-term letting properties can be considered as a commercial property, it could possibly be denied.
In fact, Ms Kable added that only few insurers offer coverage for those who self-managd their short-term letted property, which can cover guest-related damage (both accidental and malicious), theft and attempted thievery, personal liability, identity theft and strata property damage.
Ms Kable also said any damage caused by a guest of a property could run into the hundreds of thousands of dollars.
“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.
When considering short-term letting their properties, according to the Insurance Council of Australia, investors should consider:
This needs to be done before advertising on short-term letting platforms.
“There are gaps, look for specialist insurance that protects your home and contents while paying guests are staying,” the Insurance Council of Australia noted.
While it might seem like an easy fix to be covered by a platform’s coverage already, relying on it may prove disastrous, as there can be gaps which do not cover the host’s personal property, cash, pets and public liability areas.
This includes anything that would be too valuable to leave around with the potential of it being damaged or stolen, which can include jewellery, original artworks and collector’s pieces.
Certain laws or by-laws may prohibit short-term letting, which could prevent an investor from listing their property in the first place.
As always, it is important that the investor makes sure their property provides a safe and secure environment, just like in a regular long-term rental situation.