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Considering South Africa’s rising living costs, more people are renting their homes to boost their incomes. For example, a 2022 Airbnb survey of 1,800 South African hosts and guests reveals that the country’s rising cost of living continues to drive more people to become hosts on the popular platform.
However, although listing a home on Airbnb might seem like a quick and easy way to supplement your income, opening your home to strangers will always come with risk. You're entrusting people you don't know with your belongings and property.
Adding to this is that the hospitality industry is unlike any other when buying insurance cover for the risks that could be detrimental to the business. That’s why turning your property into an Airbnb will have different insurance considerations.
“Very few industries need to consider a guest coming down with food poisoning or contest with guests who don’t settle their bills. But unfortunately, that makes the hospitality sector a challenging business that requires hosts to navigate numerous external factors that can have severe consequences for them and their guests,” says Juan Fourie, Head of Hospitality and Leisure (H&L) at Santam. “Due to these risks, hosts must take several measures to ensure their business and guests are protected.”
Although most risks are beyond the control of the Airbnb business owner, they can still have a potentially devastating impact on the business. To help the country’s Airbnb hosts mitigate these risks, Santam, the leading South African general insurer, offers the following advice to hosts.
Let your insurer know you’re an Airbnb host
Retaining your domestic household insurance won’t suffice for Airbnb, as there will be a continuous flow of new guests coming through the property – increasing the risk of damage and theft.
You must let your insurer know if you’re renting out a room or the entire house so that you can institute hospitality risk insurance. If you fail to do so, your insurer may decline your hosting-related claims because they weren't notified about the Airbnb status prior.
Aircover, an Airbnb offering, only covers the basics
Outside of personal safety, property owners who list their property on Airbnb expose themselves to a host of other risks, such as property and household content theft and potential liability risk if guests get injured.
Property owners should still consult a specialised insurance agent to determine what kind of obligations, limits, and coverage they require, even though Airbnb offers damage protection and liability insurance called AirCover.
That’s because Aircover only provides hosts with basic coverage for listed damages and liabilities. This cover doesn’t replace homeowners’ insurance, renter’s insurance, or adequate liability coverage, especially if hosts need to meet other insurance requirements.
Set an emergency plan
You need to have a manual for guests detailing what to do if an emergency arises. Make sure it's obvious where the fire extinguisher is and include essential information like emergency numbers for the police, fire station and hospital. Clearly show emergency exit routes out of your area.
Invest in a security system
A home security system is crucial and will give you and your guests peace of mind. Invest in a home security system that allows for home automation which will allow you to control your security system easily using your mobile device – you can turn off or on the lights, lock the doors or control the heating when there are no guests in your home.
It is important to note that when installing a security system, you must be aware of Airbnb's security policies to avoid legal implications. For example, avoid putting cameras in the guest rooms.
For example, if matriculants stay over at an Airbnb, host a party, get drunk and damage some of the property, their insurance won’t cover that damage. However, if those same guests were thrown off the property and returned to destroy lights or furniture, this would be covered under malicious property damage.
So, property owners must introduce adequate deposit requirements that cover what their insurance won’t.
"Operating in the hospitality industry is highly challenging. Therefore, property owners must consult with brokers while listing their homes on Airbnb. This way, necessary precautions are taken to mitigate risks. Furthermore, considering the continuous load shedding the country is experiencing, we advise property owners to revisit their insurance coverage and obtain advice to consider different circumstances and risk situations that may arise due to power cuts,” concludes Juan.
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