Will your home insurance cover short term guests?

In our Airbnb guide, we discuss the type of incidents you are likely to be covered for if the worst happens . But what about your home insurance? You might be surprised to hear that most customers don't have as much cover as they think they do.

Most insurance policies are not designed to cover sharing economy activities.

If you rent your room to guests, your insurer will class this as commercial use and most will exclude this under their policies. Those that do are likely to have a raft of exclusions written within their terms and conditions that will severely restrict what you can claim for. If your insurer say’s they are happy to cover you, be careful to check what this means. Whether you’re doing it for a living or a bit on the side, treat your money-making enterprise like a business and do your homework so that you know what your insurer’s level of cover is.

What if my home insurer says I'm covered?

Insurers are not likely to cover you if you leave your door open for strangers to walk inside your home, steal your things or damage your property. Many won’t see allowing guests into your home as much different either. It’s difficult to predict what a lodger will do in your property until they have settled in for a sustained period of time. To counteract this, many insurers restrict what you can claim for if you decide to let your property out on short term basis, which is why your cover might end up being very little. In most cases, if your insurer does agree to cover you, it means they have agreed to add your guest as a lodger or additional family member. Whilst your home insurance may not be invalidated and they will still accept claims that would normally occur if the hosting activity did not exist altogether, key aspects of cover are likely to be missing.

Most standard home insurance policies do not cover theft if there has been no forced entry to your property and are unlikely to cover any claims caused by guests that have been added to your policy. This means that vandalism or accidental damage caused by a guest is unlikely to be covered either. It’s vital you check with your insurer to check you are covered for these things or you could be putting your home at risk.

You could be liable for thousands of pounds.

Home insurance policies usually exclude liability claims made against if you if this is as a result of letting out your home. If a paying guest injures themselves on your property and hold you liable, they may decide to sue you for thousands of pounds. Whilst it is true that some sharing platforms do offer some limited liability cover, some serious injuries could cost millions of pounds, leaving you with the possibility of having to pay any excess amount the insurer is unwilling to pay if the claim exceeds their limit. What would you do if you had to foot the bill?

Your insurance premiums could rise.

The premiums for standard home insurance policies aren’t usually designed to favour people who allow any number of paying guests into their premises. Insurers that do decide to cover you are likely to charge a higher premium if you rent your property out on a short-term basis due to the increased risk. What’s more, your insurer may decide to charge you individually each time you decide to bring a paying guest into your home, which could be costly.  Also bear in mind that if any claims did occur then this would affect your no claim bonus, which could see the cost of your insurance rise even higher at the next renewal. When factoring in your potential earnings, it’s vital you take this into account or it might eat into your profits. Taking out additional specialist cover that doesn’t require you to go through your main insurance may be a cheaper option.

You might not be allowed to have regular guests.

To mitigate the risk of having short term guests in your home, your insurer may only allow you to have paying guests on an occasional basis. This may be fine for people who want to make the odd bit of money on the side but those who want a regular income stream will effectively be without cover if their insurer puts a limit on how many times you can do this. 

You could be breaching the terms of your mortgage contract or lease. 

As a side note, it’s worth considering that most mortgage lenders and leaseholders do not allow borrowers and tenants to offer short term lets of their properties so check your contract first. If you’re not sure, call your mortgage company or leaseholder. If you don’t do your homework you could be evicted from your property or have your mortgage invalidated. However, bear in mind that your mortgage lender is primarily interested in protecting the asset they are investing in. It likely that they would be more comfortable with this activity if you had the insurance cover.

Do your research.

Whilst most home insurance policies aren’t designed to cover short term letting, each insurer is different they might offer a compromise that’s right for you. The take home message here is to be careful and check the facts. Don’t take your insurer’s word without digging deep into the nuts and bolts of the cover you’re going to get. If you’re not happy with your level of insurance, consider getting additional cover elsewhere and talk to your insurer to check they are happy with you supplementing your insurance in this way.

The difference between Pikl and standard home insurance.

Unlike most home insurers, with Pikl you can get cover for:

  • Fire caused by a guest.
  • Escape of water caused by a guest.
  • Accidental or malicious damage caused by a guest.
  • Theft by a guest.
  • Guest injuries.
  • Guest causes damage to third-party property.

Our cover starts from £1.50 per day. Buy Airbnb Insurance with Pikl to find out how easy it can be to access cheap, comprehensive insurance for your short-term lets.

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