Turning your home into a cash-generating machine sounds like a dream, right? Whether it’s a room, a flatlet, or the whole house, renting it out could be a clever money-making scheme. The thought of holidaymakers or long-term tenants paying top dollar is almost like winning the Lotto… Maximum return for minimal effort.
But, before you start fluffing up pillows for your paying guests, there’s something important you need to know: Your personal insurance might not be as ready for your new venture as you are.
You see, once you start renting out your space to paying guests, you’re venturing into the world of business. And, much like you wouldn’t open a coffee shop without the right business insurance, you should check your personal buildings and home contents policies before become a host. You might be surprised by how quickly things can go from ‘Welcome’ to ‘Oh flip, that’s going to be expensive to fix’.
Here’s the lowdown on why you need more than just personal insurance when you Airbnb, and how commercial insurance can save the day.
Buildings: More than bricks and mortar
Your standard buildings insurance (sometimes called homeowners insurance) likely covers all the obvious stuff… Loss of, and damage to the permanent structures on your property, as well as their permanent fixtures, like built-in stoves, taps and tiles, and light fittings.
But the moment you add a paying guest into the mix, things change. That personal policy of yours probably doesn’t cover loss or damage when paying guests are occupying the property, unless there’s visible forced entry during a break-in. And here’s the kicker: Damage caused by acts of nature, like storms or fires, might also be excluded if your property is being rented out.
So, if you’re thinking of renting out that extra room, a chat with your insurer is in order before you hand over the keys.
Home contents: Stop your stuff from taking a holiday
Imagine you’re renting out a fully- or even just a partially-furnished space. What if a guest accidentally breaks your favourite lamp or steals some paintings? (Hey, it happens.)
Your standard home contents insurance might cover the accidental loss of, or damage to the things you own *if* it’s just you and your family living there. But, once paying guests enter the picture, your personal policy may hit the brakes, especially if your home starts looking more like a boarding house or a commune.
If you don’t want to be left out of pocket, business insurance that’s tailored for the risks that come with renting out spaces could become your budget’s best friend.
Liability: Because accidents (and claims) happen
Here’s where things get even trickier. Your personal buildings and home contents insurance typically covers your legal responsibility for costs arising from accidents involving third parties, whether it’s bodily injury, or the loss of or damage to their belongings, provided that such claims are tied to valid claims for incidents that are covered under your personal policies.
But when you’re running a rental business (and yes, even renting out your granny flat counts) this protection will disappear faster than biltong at a braai. Liability claims can get pretty hefty, potentially running into millions of rands and, without the correct commercial insurance, you could be personally liable. Yikes.
The bottom-line: Renting = running a business
The unpopular truth here is that, once you start earning money from renting out your space, you’re no longer just a homeowner. You’re a business owner. And, just like every other business owner, you need specialised insurance that covers all your risks. Whether you rent out your place permanently, or just for the holiday season, it’s worth confirming with your insurer that you’ve got the right cover in place.
With your most valuable asset and all your treasured belongings in the hands of strangers, there’s no way you should risk being caught red-handed if things go wrong. When it comes to the protection that the right kind of insurance offers, you can afford to be safe rather than sorry.
Click here or WhatsApp us on 0860 50 50 50 for a commitment-free insurance quote.
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Psst… This blog provides general info only, and doesn’t count as financial or product advice from King Price or our legal and compliance experts. Remember, all our premiums are risk-profile-dependent, and T’s and C’s apply. Our most up-to-date KPPD (policy wording) can always be found here.
Our website T’s and C’s can be found here.
