With the upcoming holiday season, the prospect of renting out properties on platforms like Airbnb or privately has become an enticing opportunity for many homeowners, particularly High Net-Worth Individuals (HNWIs).
The Airbnb market in South Africa has seen a remarkable surge over the years, becoming a lucrative avenue for homeowners to earn extra income. Recent data indicates that South Africa hosts around 7,500 active Airbnb hosts, with the City of Cape Town experiencing a notable increase in guest arrivals due to the Airbnb platform. The typical host earns R24,633 by renting out their space for an average of 17 nights a year, with nearly 830,000 inbound guests welcomed through Airbnb in the previous year.
However, the financial rewards come with inherent risks. Renting out properties to strangers could lead to property damage or other liabilities, such as loss or damage to the homeowner’s or guest’s belongings, and potential third-party liability if guests are injured on the property. Hence, having the right insurance coverage is crucial to mitigate these risks and ensure peace of mind.
At Ami Underwriting Managers (Ami) on behalf of Lombard Insurance Company, we have tailored a special insurance extension for homeowners venturing into short-term rentals. This optional extension provides coverage for loss or damage when you rent out your home for reward, as long as the building is primarily used for residential purposes. The coverage includes protection for personal items of business and paying guests, business-related contents, and limited liability while working from home. Additionally, it covers accidental loss and damage due to home rental and Airbnb activities, although refunds for reservation or cancellation fees by the paying guest are not covered. Moreover, it provides coverage for business-related legal liability, legal costs, and fees arising from accidental property damage or injury caused to others, up to the maximum limit detailed in your schedule.
Insurance Tips for Homeowners:
Inform Your Insurance Provider: Before listing your property on Airbnb or renting it out privately, inform your insurance provider about your intentions to understand the implications on your current insurance coverage.
Review Your Current Insurance Policy: Assess whether your current homeowners’ insurance policy covers short-term rentals and the associated liabilities. If not, the private home rental insurance extension from Ami could be the right solution for you.
Seek Professional Advice: Consult with insurance experts to understand the full spectrum of risks associated with short-term rentals and to obtain guidance on the most suitable insurance solutions.
In conclusion, the booming Airbnb and private rental market in South Africa presents a lucrative opportunity for homeowners to earn extra income, especially as we approach the year-end holiday season. However, it’s imperative to have the right insurance coverage to safeguard against potential financial pitfalls. With Ami’s specialist insurance offerings, homeowners can confidently venture into the home rental market, knowing they are well-protected.