Thinking about renting your property out in order to make some extra cash?
Well you should know your insurance liabilities.
A number of South Africans have taken to renting out a room, flatlet, or their entire house to earn extra income, especially during the holiday season.
Homeowners have flocked to platforms like Airbnb, Roomies or Roomster to rent out their homes and or rooms to potential guests.
The idea of extra money can be enticing but Wynand van Vuuren, client experience partner at King Price Insurance explained that your home insurance risks change when you rent out a living space for income.
“Your personal buildings and home contents insurance covers loss, damage and liability, but the addition of paying guests brings additional risks and your insurer may reject claims if you don’t have the correct cover in place,” he said.
Building vs personal
Van Vuuren noted that personal insurance for your property and all the structures on it typically included cover for the loss of, and damage to, the buildings themselves, as well as the permanent fixtures and fittings, such as built in stoves and cupboards, fitted carpets, light fixtures, and taps.
He added that this cover is specifically excluded when a building is let or sub-let, unless there are visible signs of forced entry. Cover for loss and damage due to acts of nature may also be voided.
In terms of home contents, van Vuuren said that this insurance covers the accidental loss of, or damage to, everything that would fall out if you turned your home upside down, and as the owner it’s your responsibility to insure them if you rent out a furnished space.
“However, your personal insurance probably won’t cover these contents if your house is being used as a boarding house or commune,” he advised.
The insurance expert explained that liability coverage in your home and contents insurance generally protects you in cases where you’re held responsible for accidental injury or death of third parties, accidental loss or damage to third-party property, and any legal costs associated with defending or settling such claims.
Van Vuuren said that this insurance applied as long as the liability related to a valid claim under a person’s buildings or home contents policy and is approved by the insurance company.
“These claims can run into millions of rands, and you may be liable for them in your personal capacity if you don’t have the correct insurance in place,” he added.
When you receive income for something, you’re essentially running a business, Van Vuuren emphasised.
He advised that in most cases you need specialised cover from an insurance provider.
“Even if you just rent out a granny flat on your property, it’s worth confirming with your insurer that you’re covered for all potential risks,” van Vuuren noted.
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