Renting out property this holiday?

Are you renting out to earn extra income during the holidays?

Here’s what you need to know: the summer holidays are around the corner and a lot of people are gearing up for a well-deserved break.

For an ever-increasing band of people though, the holidays mean earning additional income by renting out a spare room, their house, or a flat to holiday makers.

Santam, South Africa’s largest short-term insurer warns of the insurance implications to renting out your place. If you rent out your property to earn extra income, it would be advisable to consider a specialist hospitality or commercial type policy to cover your risks.

Marius Neethling, Personal Lines Underwriting Manager at Santam says it is crucial for homeowners to check their policies to make sure they are covered adequately, to make sure their policies are up to date, and to ensure that there is nothing in the rental contract and anywhere else that could end up in a claim being delayed or repudiated.

Burglary, vandalism and burst or leaking water pipes are some of the most common occurrences when homeowners are away.

“Sometimes people mistakenly think they are covered automatically in such cases when really they are not,” says Neethling. Santam offers options for its policy holders who want to let out their homes over the holidays.

“If you’d like to rent out the extra rooms in your home, you can take an additional optional cover for accidental damage to your household contents, such as if your plasma television falls and breaks we’ll provide cover for it,” says Neethling.

Santam also offers an option of a limited bed and breakfast cover in the home which you permanently live in and this applies if three or fewer bedrooms of your home are rented out to guests.

Letting your property considerably increases your risk of loss or damage, and you are exposed to liability claims from paying guests.

“While you are not responsible automatically for injuries to people living in your house, you do need to discuss the matter with your insurer or intermediary before accepting any kind of liability,” says Neethling.

Santam also provides an extra 10 per cent cover on household contents between 15 December and 31 January annually, free of charge.

“This is our way of giving our policy holders extra protection over the Festive Season,” says Neethling.

Property owners who are renting out their properties over the Festive Season, or just generally are letting their premises should take note of the following:

• When renting out your home inform your insurer and check the conditions of your insurance policy as to what the requirements are when renting out your home.

• Clarify up front all responsibilities and liabilities of the homeowner and that of the tenant. Your intermediary should be invaluable in making sure everything is in order.

Gerald Sutherland, an intermediary from Watney-Vineyard Insurance Brokers, advises that using your personal property for commercial gain may not be covered by your personal insurance policy. “It is important to have your broker help you understand the risks you face and consider appropriate solutions, including but not limited to, additional insurance cover. If you rent out your property to earn extra income, it would be advisable to consider a specialist hospitality or commercial type policy to cover your risks.”