New Zealand: Airbnb and your insurance – what you need to know

Ever changing technology means that the insurance industry is often at risk of being out-of-date if it fails to adapt. Recently I was travelling in Melbourne and stayed at an apartment booked through the Airbnb app. It was a novel experience and I contemplated what an insurer or underwriter would think of the concept and how would it impact on insurance cover?

Airbnb is a simple concept – my home is your home (for a set fee). Someone signs up to the Airbnb website and offers their home for lodgers to stay in. These range from the basic rooms right up to opulent penthouses depending on your budget. People who subscribe to the site then book a home to stay in when travelling. What happens to the owners/tenants is a mystery but they depart. Instructions are provided via the app warning about whatever foibles the house may have. Money is paid via a registered credit card in advance and a standard cancellation policy applies, much like any hotel.

Why would you take the risk of letting strangers into your home? The critical element is accountability. Once you have stayed, the owner/tenant reviews you as guests and you review them as hosts. So if you have a rock and roll style bender and trash the place, your name would be mud – not to mention the app has your credit card details. However, there is still a major element of trust. A home owner is literally leaving their possessions in your control, a kind of wholesale bailment if you will. Obviously the financial benefits would need to outweigh privacy and security concerns.

Most insurance policies allow for guests to come and go at your behest. This is part of day-to-day life. The usual feature is that you are present and have met the people before. Most of us tend to avoid inviting strangers in off the street. Therefore, if you are considering offering your home on Airbnb you should speak with your insurer. They are the gatekeepers of your policy conditions; if you fail to meet those conditions then cover could be declined. Every insured has duties of disclosure and honesty when dealing with their insurer, so be sure to check every detail. If the worst was to happen, then you want to be sure you have the best possible cover.

Airbnb do offer a guarantee, of sorts, to cover damage that occurs during the stay of guests. However, you need to check the list of requirements. The guarantee operates as top-up cover and a series of criteria need to be met before a pay-out is considered. Practically speaking the guarantee does sound good and provide some comfort but it is no substitute for proper insurance coverage.

If you decide to take the plunge and let your property, be sure to check the terms of your lease or tenancy and any applicable body corporate rules (if any). Once that is done, have a discussion with your insurance provider about the best cover for your home and contents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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