Property sharing services – implications for insurance

Airbnb is a relatively new way of renting your home and has grown rapidly in popularity over the last 9 years. Since it launched in 2008, Airbnb has become a global phenomenon with more than 300,000 listings in 192 countries. Their website allows you to list your house or flat as a whole or even a room in your home, to rent out to others for long or short periods of time (known as hosting). Other similar sites have sprung up such as HomeAway, Homestay and Tripadvisor’s Holidaylettings.

It’s a great source of extra income for property owners and you can now also benefit from the more favourable “rent-a-room” allowance (which came into force in April 2016), which now allows you to earn up to £7,500 from renting out part of your main residence without having to declare it or pay tax on it. From April 2017, the government has also introduced a £1,000 allowance for any income from property you own.

Nearly 80,000 British homeowners now earn supplemental income through the use of property sharing services. However, before you jump on this particular bandwagon, you need to be aware of some hidden issues which can still cause problems for you as a property owner:

Check any leases, contracts or regulations relating to your building to make sure that there are no restrictions against subletting

You will also need to check with your mortgage lender, if applicable

You could be unknowingly jeopardising your insurance policy if you do not alert your insurer about your plans to host, as they could invalidate your cover. Whilst some property sharing services provide a ‘host guarantee’ should something happen whilst a guest is renting the space, it should not be treated as a replacement for home or tenants’ insurance. In general, these guarantees do not protect hosts’ cash and securities, pets, reasonable wear and tear, or common areas. In addition, it only offers limited protection for jewellery, collectibles and artwork.

The problem with some home insurance providers is that they still don’t have much awareness of how popular sites like Airbnb have become and haven’t adapted policies for this. As a result, they can tend to think of Airbnb hosting as being the same as running an actual B&B.

It might be worth considering a policy which covers this kind of hosting as standard or a provider that can add this cover to your standard home insurance policy.

You may also want to consider public liability cover. A third party may have an accident whilst at your property and decide to claim, this can be especially costly as claims go. If they are injured or if their property is damaged and you may be considered liable, you’re legally required to provide compensation. Some hosting sites provide their version of this but only for claims that arise during a stay. Further insurance to think about includes cover for loss of booking income (say if a burst pipe or fire meant that you couldn’t host for a while), buildings insurance (again check your existing policy is still valid if you host), home care emergency and accidental damage. The need for additional cover will vary depending on the type of property you have and how you are using it.

If you are at all unsure, you can speak to one of our team for clarification. They are here to advise on this complex area of insurance and can help find you the cover you need.