The Risks Associated With Starting An AirBnB
Opening a space in your home or a holiday apartment to potential guests has become a great way for many South Africans to earn an extra income. The benefits are obvious. Aside from the additional source of income, there is also the advantage of not leaving your property exposed and empty, meeting interesting new people and showing people our true South African hospitality.
But are there any risks in using AirBnB?
The AirBnB program works very well. Usually you can vet your guests, making sure that you are only opening your space to reputable people. Your income is protected by the AirBnB system, ensuring that you are paid timeously. And if you look after your guests well, you can attain Superhost status and get even more bookings.
The risks involved with AirBnB are not with the program itself, but in opening up your home to short term paying guests.
The risk in using AirBnB is your insurance
Unfortunately, the general thought on insurance when renting it out on a short-term basis is that you can stay on your own personal insurance. Surely everything will be fine? Nothing much has changed. In truth it may be fine for a time, when you don’t have to claim, but that’s when things will change.
The reality is that you are now making money from your personal property, which means that insurance companies view your house to be a business risk, since you’re using the property to generate income. Most personal insurers will not cover you for a vast number of issues that may arise from this type of small business.
Your Personal Insurance will NOT cover you for the following:
- THEFT BY GUESTS – If your guest decides to take more than what they paid for, the personal lines policy you have in place WILL NOT COVER THIS. You have given them the keys, there is no forcible or violent entry/exit, which means that there is no claim.
- GUESTS EFFECTS – If a guest’s belongings are stolen from your property, there is no way to cover this
- ACCIDENTAL DAMAGE – Guests occasionally cause damage to your property and this may not be covered.
- BUSINESS INTERRUPTION – Once you become reliant on your additional income, it may be a huge shock if you are not able to take in guests due to fire, flooding or other circumstances. A personal policy cannot give you this cover.
These are all very important points to consider when you are considering AirBnB.
How do I get this cover in place?
Incompass can help you to find cover that will protect both your personal and business interests in the property. We’ve been doing this for years, we know exactly what you need.
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