This article was updated on 23 October 2019.
As temperatures begin to soar, school finishes for the year and office workers across the country plan their summer vacay, it’s time for landlords with holiday lets to prepare for the influx.
During the summer, guests looking for a sea or tree-change flock to holiday lets in popular areas (think Margaret River in WA, the Barossa in SA, Great Ocean Road in Victoria, Ballina and the Hunter in NSW, the Gold and Sunny coasts in Queensland). It’s not uncommon for properties in prime locations to experience close to zero vacancy rates from mid-December to the end of January, but without the right landlord insurance in place your plans for a profitable summer could see you sobbing into your ice tea instead.
Whether you have a holiday home that you rent out, or are looking at going down the Airbnb route, it pays to make sure you have the right landlord insurance cover in place before your first tenants arrive.
While you may have insurance on the property already – for example home and contents or landlord cover designed for traditional fixed-term leasing – or expect to be covered by the insurance offered by some platforms, you might find out the hard (and very costly) way that you aren’t actually covered for damage or liability caused by a paying guest.
If you are renting out your property short-term – as a standard holiday let or through a share accommodation platform like Stayz or Airbnb – you should look at taking out a landlord insurance policy designed for the short-term market. But before you sign up for the first landlord policy you see, make sure the policy actually covers short-stays – not all landlord insurers offer short-term policies and some specifically exclude Airbnb and other platforms.
To protect your property and your financial future, you’ll want a short-term landlord policy that covers:
Ensure the property is protected against a range of insured events such as fire, storm and water damage (including flood). EBM RentCover ShortTerm provides up to $65,000 to cover the cost of repairs resulting from water damage, storm damage or fire damage.
In addition to damage to the building (if you opt to insure the building and not contents-only), the policy should also cover damage caused by tenants and their pets or guests, whether the damage is accidental or malicious. Our ShortTerm product provides up to $65,000 in cover for accidental (including pet), intentional (in case the tenant does something like turn your backyard into a fire pit) and malicious damage (though we caution you against knowingly letting your property as a ‘party pad’).
Accidents happen – things get broken, things go missing – and you need insurance cover for the property’s contents. Holiday lets are usually not only fully furnished, but equipped with both the necessities (think bedding, linens, napery, cookware, crockery, glassware, cutlery) and the niceties (entertainment systems, books, board games, sporting equipment). This level of fit-out in terms of contents is generally not catered for in standard landlord insurance policies (where cover is usually limited to the building itself, fixtures and chattels, and some landlord contents). So look for a policy that provides contents cover for all the items supplied in the home for guest use.
And make sure the policy covers damage/loss of contents as well as theft by tenants and their guests or third parties (e.g. burglars too). Our $65,000 in coverage for guest damage includes damage, loss and theft of contents.
If your guest is injured (or worse) on your property, you won’t want to be arguing with the platform about liability cover (chances are, you’ll find you’re on your own). Make sure you have a policy that provides a high level of liability cover – ours is $20 million. You definitely don’t want to be paying compensation out of your own pocket if things go pear-shaped.
Loss of rent
If a water pipe bursts and you have to cancel all your forward bookings, or access to the island your hideaway is on is cut-off due to a storm and your guests can’t reach your property, you are going to lose out on rental income.
If you have a landlord policy specifically designed for short-term leasing, lost rent resulting from an insured event can be recouped. At EBM RentCover, we provide up to $50,000 in cover. Be aware that the way in which loss of rent is covered in short-term policies is different to that for fixed-term leases (for example, you can’t claim for rent default) – that’s why if you are switching your property from fixed-term to short-term leasing, you need to switch your landlord cover too.
At EBM RentCover we work to educate clients so they understand the value of landlord insurance and why it’s so important to have the right insurance! Talk to us about ShortTerm cover and you can kick back and enjoy that drink with the little umbrella in it this summer, safe in the knowledge your property – and your finances – are protected.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 954 374 if you have any questions.