Why You Should Inform Your Insurance Provider Before Using Airbnb

Since its inception in 2008, Airbnb has experienced mounting success among travellers looking for low-cost accommodation options without having to compromise on comfort. With listings in more than 35 000 cities and 192 countries, Airbnb rivals the conventional hospitality business model by allowing guests to rent lodgings online and directly from private property owners. 

Airbnb is also enjoying a growing presence in South Africa. The company recently reported an increase of business by 138% locally for the last year, with over 9 400 homes now registered on their database, according to Fin24. These figures prove that more and more property owners in South Africa are welcoming the Internet accommodation platform – either as a way to generate extra income or meet exotic new people.

But, as rewarding as it may be, making one's home available to strangers is, unfortunately, not risk free. If you're planning to rent out via Airbnb, it would be in your best interest to consider possible hazards such as property damage and whether your Home Insurance will cover you in that instance. 

Hippo.co.za spoke to South African working professionals and regular travellers to get their insights on Airbnb and how hosts can safeguard their property and possessions when leasing out to guests.  

Airbnb: What our contributors think

What is the Airbnb service?

Carolyn Holgate, General Manager of Products, Marketing and Sales at MWEB provided more insights into how Airbnb’s success is a classic example of the shift to the ‘sharing economy’.

“The sharing economy is a global trend and sign of the democratising power of the Internet, which shows no signs of abating here or abroad. The growth in this sector has developed as consumers have come to understand the value which exists in the peer-to-peer activity of sharing goods/assets to generate some form of income.

Millions of people all over the world shifted their loyalty from traditional companies to the global businesses that made the concept of the sharing economy popular, such as Fon, Uber and Airbnb.”

The fact that South Africa is Airbnb’s largest market in Africa is a clear indication that South Africans are embracing the sharing business model – both to generate income from their properties and as a low-cost accommodation option for domestic travel.

“The success of brands such as Airbnb and Uber illustrates once again that the Internet allows entrepreneurs to rethink age-old business models which have the power to innovate whole industries. The additional rooms that Airbnb has added to the existing, traditional hotel industry has not only stimulated competition but has also contributed to job creation.”

Monique Swart, founder of the African Business Travel Association (ABTA), says:

"From a leisure point of view for younger travellers, I think that Airbnb provides a very interesting and clever solution, especially for travellers that are all about ‘the experience’ of something new and different, at rates that are often more affordable than an ‘impersonal’ hotel stay.

From a corporate travel perspective, I think there is a bit more to think about. Airbnb estimates that 10% of their bookings are from within the business travel sector and they are working hard to increase that number. To my mind, in order to do that they are going to need to overcome some fairly stringent requirements, which many corporations have within their corporate travel policies - mainly around data reporting and traveller safety.

But overall, Airbnb is a great concept that is making life very interesting within the travel sector. It provides a novel and attractive platform for people who are tired of ‘the same old’ hotel options and are looking for some authentic experiences while travelling. 

However, within the corporate travel industry where the duty of care is a big consideration, and where many travellers still prefer the comfort and ‘status’ of upmarket hotel brands, Airbnb will need to do some more product development to make themselves more attractive."

Insurance options for property owners

Why notifying your Home Insurance provider is important

"There are various insurance options that can cover most unforeseen circumstances, and home owners need to do their homework to ensure that they are covered," says Monique. "I think that trusting Airbnb to do vetting on guests is not a good idea meaning that people need to have some form of their own vetting processes in place.

"There is always a risk when renting out a property - even big name hotel GMs will tell you that they have had some monster guests trashing hotel rooms, so I think that as with any other business venture, risk versus reward must be measured and ways of mitigating the risk must be put in place before going ahead."

Andre Van Kets, co-founder and Marketing Director of Drive South Africa, says:

"I believe Airbnb is great. I used it personally while travelling through India and in Europe earlier this year. We also stayed at hotels and guesthouses during our trip (both in India and Europe), and overall, I'd say our stays at Airbnbs were more comfortable, memorable and better value for money.

My wife and I have also rented out our apartment in Cape Town via Airbnb, four or five times, and all of the experiences were positive. The beauty of Airbnb is that you can prescreen your guests. So, if you are particularly cautious or sensitive about your personal space, then you can choose your guests very carefully.

I would recommend Airbnb as a form of making additional income and of meeting like-minded travellers from around the world."

What he advises:

• Screen your guests carefully. Check that they have all their social accounts verified and their hard copy ID verified (i.e., passport).

• Engage with them via the Airbnb inbox before accepting their booking. Ask them why they're travelling to your city, etc.

• Check out their reviews. If something doesn't add up, you can politely decline their offer.

• If you're overly concerned, then pack away your most valuable items: jewellery, your finest china, your collector’s edition Star Wars DVD box sets, etc.

• If you're renting your home for income, then I do believe it's wise to notify your insurance broker/insurance provider. If something happens while guests are in your house, it's possible that your regular Home Insurance will not cover you.

Family considerations

Laura le Roux, freelance writer and blogger of Harassed Mom, says:

"I think I would recommend it to couples travelling, especially when travelling to a country that has a different language, it would be nice then to have 'insider' help. It is definitely something I would use when travelling.

If you have the space then it sounds like a fun way to make a bit of extra income and meet new people. Personally for us it wouldn’t work in our current home because there is barely enough space for the six of us so adding guests will be a logistical challenge but if we had an extra room I would consider it. I can’t see it being particularly disruptive to a child’s routine, and it would be a great way for them to experience people from other places."

What she advises

“Make it clear to your guests how everything works. Things could get broken unintentionally if people don’t know how they work. Also make it clear what areas are personal areas and what areas are communal.”

Belinda Mountain, co-owner of a copywriting agency and mommy blogger at Making Mountains, says:

"I think Airbnb sounds great in concept, although I have yet to use it myself. Many of my single friends use it to rent out their apartments in Cape Town to foreigners and they end up making great income from it. Another friend used it very successfully to rent somewhere to stay on her recent trip to Argentina and couldn't rave about it enough - it was affordable, convenient and the accommodation was of excellent quality.

Personally, I don't like the idea of renting out rooms where another person or people are staying, as I'm a very private person. So if I did use Airbnb for a family holiday, I'd definitely want to rent out an entire home. The same applies to having people stay in my own home - while I completely see the advantages of meeting new people from all over the country and the world, I would worry about hosting strangers and that my kids would disrupt them and vice versa."

Conclusion

If you have vacant space available in your residence, you might be interested to offer it as short-term accommodation to guests on Airbnb. Whether you intend to lease out your entire house or just a room, be sure to first inform your Home Insurance provider to find out how it can affect your risk profile.

Depending on the insurance company, you may be permitted to rent out your property for a short period. Other insurance providers may demand a backup of your current Home Insurance policy before they will provide cover for injuries and damage that may arise when you hire out. However, if you're looking to rent out on a continuous basis on Airbnb, your insurer may regard it as a business. You will therefore need to take out business cover, as Home Insurance policies do not make provision for business pursuits operated at home. And remember that if you’re flying yourself, perhaps as part of an exchange via Airbnb, to take out Travel Insurance for your security.