Airbnb owners get insurance warning

David 'DJ' Olivier owns an airline-themed apartment in Auckland which is popular on Airbnb.
CHRIS MCKEEN/FAIRFAX NZ

David 'DJ' Olivier owns an airline-themed apartment in Auckland which is popular on Airbnb.

Homeowners are often told that Airbnb is a good way to make some money from the roof over their heads.

David Jack Olivier, a flight attendant, has talked about renting his central Auckland apartment on the online accommodation platform.

Hamilton first-home buyer Francie chooses to rent out her house on Airbnb while she house-sits in Auckland. She says she makes more money this way than if she were to rent it out in a traditional tenancy.

READ MORE: Renters made $1568 from Airbnb deal, pinged $1300 for breaching rental agreement

But there are some things you need to know if you are considering doing the same, to make sure you are not caught out in the event of a disaster.

Before you do anything, you need to give your insurance company some warning of your intentions.

They will be able to tell you how the existing insurance policy on your property would respond to an Airbnb situation.

If you are only going to let the property from time to time, you may find your existing policy still applies – with some caveats.

Generally, insurance policies do not cover loss or damage caused by people you invited into the property, such as Airbnb tenants.

"Loss intentionally caused by tenants or guests is generally excluded, except cover is still provided if the loss is as a result of fire or explosion. Some policies are able to be extended to provide some cover for intentional acts, vandalism or theft by tenants' but a sublimit is likely to apply," said Ralph Hart, IAG's manager of personal lines underwriting solutions.

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IAG, which has brands including State and AMI, recently updated its methamphetamine rules. It will not cover properties let on Airbnb for contamination caused by methamphetamine use, but will still cover damage as a result of the drug being manufactured there.

If you are going to rent the house out more regularly, you might need to get a landlord policy.

Hart said a property that was only used for short-term stays might need a different type of insurance because normal EQC cover might not apply.

Adam Heath, Vero's executive general manager of portfolio and product, said there were other things to consider, too.

"in some circumstances, if a guest is injured in your home, you could be required to cover some of the costs of their medical care or compensate their lost income. Vero's home policies can provide cover for these costs."

Airbnb offers its "host guarantee", which should cover damages up to $1.3 million. But it is limited – things such as cash, collectibles and personal liability aren't covered – and both Airbnb and the insurance companies say it should not replace an insurance policy. 

 - Stuff

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