New research conducted by accommodation accreditation company Quality in Tourism has found that, despite paying guests expecting that their accommodation hosts have adequate insurance, few of them actually check this when booking.
In its white paper, Quality in Tourism’s research established a list of things that people thought were essential as minimum safety standards when booking any sort of paid-for accommodation. One of these was insurance. Its research found that whilst 58.1% of customers thought that insurance was essential, only 1 in 3 (31.3%) said they actually checked to see if the accommodation they were booking had adequate cover.
Louise Birritteri, CEO and founder of Pikl commented, “These findings provide really strong evidence that the insurance needs of the majority of short-term rental hosts are not being adequately accommodated by major insurers in the UK. Guests and hosts participating in the short-term letting sector presume that their hosts’ standard home insurance provides adequate cover. The truth is that, in the vast majority of cases, it’s not. Currently, too many short-term let hosts are not properly insured, more through a lack of understanding than avoidance. That’s because their standard home insurance will not cover any liability from letting a property or room on a short-term basis and could result in their claims not being settled and their policies being cancelled.
“If the majority of guests are not bothering to check, it could lead to a very unfortunate situation where they are not covered should they experience theft, trauma or worse, a severe accident leaving them hospitalised or even permanently injured or incapacitated. We very much encourage anyone booking a short-term rental to check whether their host has the right insurance cover in place. Quality in Tourism’s accreditation scheme should help guests to identify where that insurance is provided.”
Deborah Heather, Director of Quality in Tourism said, “Our findings have highlighted the need for there to be a set of universal standards in place for all types of accommodation where customers pay to stay. It shows that there is still a gap between what people perceive to be in place automatically in regard to safety, cleanliness, and compliance with the law, but in reality, it’s not the case. Importantly, not enough customers are checking these standards before booking. Insurance is seen as one of the essential elements of any rental accommodation’s minimum standards, but we know that in many cases there isn’t the appropriate insurance in place. We would encourage people participating in the short-term let sector to safeguard their rental income and assets by taking out the right insurance from a specialist insurer, such as Pikl, so that, in a worst-case scenario, they are not putting at risk all that they own.
“We believe that all accommodation hosts, including those in the sharing economy, should have the relevant insurance. Our Safe, Clean & LegalTM scheme includes insurance, giving hosts an industry-recognised accreditation and guests the peace of mind that they will be staying in accommodation that meets quality minimum standards.”
One of the key aspects of insurance that Pikl are keen to bring to hosts’ attention is the public liability side of short-term letting. Whilst some hosts may be prepared to risk having to pay a few hundred pounds out of their own pocket to repair a wine-stained carpet or replace a broken door rather than pay for additional insurance, if a guest suffers a serious accident it could result in expensive litigation, costing them tens or even hundreds of thousands of pounds in compensation. That is a risk not worth taking.
Earlier in 2019, we published an industry-wide report* on the sharing economy, which unearthed a number of serious issues where short-term letting hosts are being neglected by the insurance industry:
• Appropriate cover for short term letting is virtually non-existent
• Some insurers will void/cancel policies if a customer participates in short-term letting
• Where cover is available, it’s only for a short period and severe exclusions are imposed
• Insurers are not informing customers that they need to declare their short- term letting.
• Insurers may not pay out on a short-term letting related claim if this activity was only discovered at the point of claim
You can download a full copy of the Quality in Tourism report here. In addition, if you would like to speak with the team about your existing insurance and short term letting needs please do not hesitate to contact our advice centre on 0800 254 5171.
*The ’Insuring the sharing economy in 2019’ report is based on a combination of mystery shopping and a series of qualitative interviews with representatives of the UK’s largest insurers, who manage 90% of gross written premium (GWP) in the UK property insurance market. The survey group represents £4bn of a market worth c£4.5bn, source: Deloitte UK household insurance seminar September 2017 (which pulls together a summary of PRA returns by insurers). It was the most recent report published at the time of the survey.