Short-term holiday rentals warned to check insurance policies
The Insurance Council of Australia has warned householders to check their insurance policies before renting out part of their home to holidaymakers.
Website Airbnb has become popular with property owners looking to cash in on short-term holiday rentals.
Airbnb, which was founded in 2008, has reportedly raised around $800 million from investors, including almost $500 million in April from TPG, T Rowe Price and Dragoneer Investment Group. Its value is estimated at between $10 billion and $13 billion.
However, there has been heated debate internationally over the legality of short-term rentals through the site.
New York State Attorney General Eric T. Schneiderman found that 72% of units for rent in New York through Airbnb appeared to be breaking local laws which prevent rental terms of less than 30 days in most apartment buildings and require tax to be paid on hotel-style accommodation.
In Australia, short-term holiday letting is covered by fair trading and consumer laws. Local councils and strata agreements may also place restrictions on holiday letting. Subletting by tenants is permitted only if the landlord consents.
Home owners, tenants and holidaymakers also need to check that insurance policies cover online peer-to-peer house sharing services, ICA chief executive Rob Whelan said.
“It is essential that home owners or tenants who consider using online house-sharing services discuss this with their insurer beforehand, and check how this could impact their home and contents insurance, strata or renter’s insurance policies,” Whelan said.
“Anyone thinking about renting a room or part of their home should know that they might not be covered for property damage and other losses that could happen as a result of renting it out to holidaymakers. Importantly, they may not be covered for public liability should a paying guest be injured on the premises.”
Whelan said many insurers regarded online holiday rentals as a business activity so standard home and contents policies may not apply.
Special insurance policies are available for landlords of short-term rental properties and holiday homes. These are typically separate policies from standard landlord insurance cover.
Travel insurance policies often did not cover cancellation, or loss and damage of possessions in the rental properties and guarantees provided by some peer-to-peer accommodation providers did not cover items such as cash, or pets or personal liability in shared areas, Whelan said.