Renting out a room, flatlet, or your entire home can be a great way to earn extra income – especially during holiday season when bookings are likely to be forthcoming. And, with platforms like Airbnb, it’s become incredibly easy to do so.
However, before you welcome paying guests, you should check with insurer what you are and aren’t covered for. Wynand van Vuuren, client experience partner at King Price Insurance, says that your risks change when you rent out a living space for income. “Your personal buildings and home contents insurance covers loss, damage and liability, but the addition of paying guests brings additional risks and your insurer may reject claims if you don’t have the correct cover in place.”
Van Vuuren breaks it down for us:
Building vs personal: Personal insurance for your property and all the structures on it typically includes cover for the loss of, and damage to, the buildings themselves, as well as the permanent fixtures and fittings – like built in stoves and cupboards, fitted carpets, light fixtures, and taps. Van Vuuren notes that this cover is specifically excluded when a building is let or sub-let, unless there are visible signs of forced entry. Cover for loss and damage due to acts of nature may also be voided.
Home contents: This insurance covers the accidental loss of, or damage to, everything that would fall out if you turned your home upside down, and as the owner it’s your responsibility to insure them if you rent out a furnished space. However, your personal insurance probably won’t cover these contents if your house is being used as a boarding house or commune.
Liability cover: Your personal buildings and home contents insurance will likely cover your responsibility for the accidental death of, or bodily injury to, some third parties; the accidental loss of, or damage to, things that belong to some third parties; and legal costs that someone else may recover from you, and which your insurer has agreed to, in order to settle or defend a claim against you – provided that this liability is linked to a valid claim under your buildings or home contents cover. These claims can run into millions of Rands, and you may be liable for them in your personal capacity if you don’t have the correct insurance in place.
The thing is, when you receive income for something, you’re essentially running a business. This means that you need the specialised cover that your insurer provides. “Even if you just rent out a ‘granny flat’ on your property, it’s worth confirming with your insurer that you’re covered for all potential risks,” says Van Vuuren.
