The Insurance Risks of Letting Someone Stay in Your Home

If you gain financially in some way from letting someone stay in your home, your insurance company may not cover ensuing claims for damage, theft or injury. This applies to arrangements such as letting out your whole home or part of your home on sharing platforms such as Airbnb. However, your insurer would typically not object to you simply asking a trusted person to house-sit your home during your absence or doing a holiday house swap with people you know.

Short-term rentals

Ernest North, co-founder of insurance platform Naked, says that while it’s easier than ever to rent out a room in your home, your whole house, or your holiday home through online platforms such as Airbnb, it is important to understand that insurers treat short-term rentals differently from normal living arrangements. This is because the risks of accidental damage or theft are much higher when there are many different people from different places using your home.

“Most insurers won’t cover short-term rentals under a standard personal home policy,” says North. “If you rent your place out on Airbnb or similar platforms and haven’t told your insurer, your claim for damage or theft might be rejected.”

The types of policies affected would be your household contents policy, which covers your personal belongings in the home, and your homeowner’s policy, which covers the building and other structures.

Apart from the higher risk of loss or damage to your property, you need to consider a scenario where you may be sued for injury if, for example, a guest slipped on the floor and broke a leg. Personal liability cover, which is included in your household contents policy to cover injury to visitors, would not extend to paying guests.

If you rent out a room or granny flat while occupying the main house, many insurers treat this differently from full short-term letting and may give you cover. But North says you should nonetheless check with your insurer, not taking anything for granted.

“A commercial policy might be the best option for most hosts,” says North. “You will be able to claim this as a tax-deductible expense against your rental income.”

Using a house-sitter

You might pay someone or ask a friend to stay in your home to look after your pets, water your plants and deter burglars while you’re on holiday. This sort of arrangement is acceptable to insurers. “As long as the house-sitter is there with your permission, most home insurance policies will cover you for accidents or theft – obviously not theft from house-sitters themselves,” says North. “That is, unless they are doing something wild like running a car repair shop from your garage or subletting rooms in your house.”

North says it is important the house-sitter is made aware of all responsibilities that you as the owner have for looking after the home, such as ensuring it is locked when they go out. During their stay in the house, the insurer would expect the house-sitter to take all reasonable steps to avoid losses.

Holiday house swaps 

Swapping homes with another family gives each party access to a holiday home without having to spend money on accommodation. If, for example, you stay in your brother’s Cape Town home while he and his family use your flat in Sandton, most insurers will treat this in the same way as having a house-sitter – your building and contents should remain covered under your normal home policies.

However, North warns of some catches:

• Your policy might not cover you for theft if there are no signs of forced entry.

• Your policy would normally not cover belongings that are not your own – in other words, anything belonging to your house-sitters.

“If you swap homes regularly with different people or use platforms to swap stays with strangers, your insurer may regard this as short-term letting or commercial use, even if no cash is paid,” says North. This is because the risk profile resembles that of a short-term rental rather than a standard owner-occupied home. As such, you may need to look into a commercial policy.

Whatever the arrangement, North advises that you contact your insurance company for approval. “A quick check with your insurer before the holidays may prevent you from an expensive loss if something goes wrong,” he says.