According to a white paper by Quality in Tourism, many short-term lets may be inadequately insured. The reason isn’t due to hosts not properly insuring their properties. Instead, it’s because the property owners wrongly believe their homeowners insurance will cover short-term lets.
Pikl, which offers specialist insurance for short-term lets, has found another problem — that major UK insurers are not adequately providing insurance for short-term rentals, which makes the problem more complex.
Guests Not Checking Insurance Status
Louise Birriteri, chief executive and founder of Pikl, asks guests to check their rental accommodations’ insurance status prior to booking their stay.
Quality in Tourism’s report showed that many guests expect their hosts to have the right type of insurance, and adequate insurance. However, many guests simply don’t bother to check.
About 50% of customers believe their hosts should have insurance; however, only 31.3% of guests checked to make sure their accommodation was adequately insured.
Standard Home Insurance Policies Do Not Cover Short-Term Lets
Birritteri indicated that the majority of rental hosts are not adequately insured. She went on to say, “Guests and hosts participating in the short-term letting sector presume that their hosts’ standard home insurance provides adequate cover.
The truth is that, in the vast majority of cases, it’s not. Currently too many short-term let hosts are not properly insured, more through lack of understanding than avoidance.”
She went on to explain that standard home insurance does not cover any type of liability from renting out a room or property for short-term stays. As a result, hosts and guests are left unprotected in case of an accident, etc. The home insurance will not cover the claim and the policy could also be cancelled.
According to Birritteri, “If the majority of guests are not bothering to check, it could lead a to a very unfortunate situation where they are not covered should they experience theft, trauma or worse, a severe accident leaving them hospitalized or even permanently injured or capacitated.
“We very much encourage anyone booking a short-term rental to check whether their host has the right insurance cover in place. Quality in Tourism’s accreditation scheme should help guests to identify where that insurance is provided.”
Calls for Universal Standards
Deborah Heather, director of Quality in Tourism, said their white paper shows the need for universal standards for insurance coverage for all types of accommodations.
Heather said, “It shows that there is still a gap between what people perceive to be in place automatically in regard to safety, cleanliness and compliance with the law, but in reality, it’s not the case. Importantly, not enough customers are checking these standards before booking. Insurance is seen as one of the essential elements of any rental accommodation’s minimum standards, but we know that in many cases there isn’t the appropriate insurance in place.
Quality in Tourism runs the Safe, Clean & Legal ™ scheme, which includes insurance, along with an industry-recognized accreditation which assures guests they are staying in a place that meets at the least the minimum quality standards.
Public Liability Coverage for Short-Term Rentals
In another report, Pikl found additional serious problems for short-term let hosts are not being supported by the insurance industry. For example:
- Not many insurance providers include cover for short-term lets
- When it is offered, this coverage is usually only for a short period of time and comes with strict exclusions.
- Some insurance providers cancel policies if they find one of their customers offers short-term lets.
- Insurers are also not letting customers know that they need to let the insurance provider know there are involved in short-term lets.
- If a claim is made, insurance providers may not pay out if they are only informed at the time of the claim that a short-term let is involved.
This lack of knowledge puts hosts and their guests in danger for lack of insurance, or for not having the right level of coverage.
Pikl urges hosts to purchase public liability coverage for short-term lets. They also advise guests to check on their accommodations to ensure they’re properly covered.
Remember, if you plan to book a short-term rental, be sure to check to see if the property is covered by short-term let insurance. If not, then look for another property to book. Short-term rental protects both you and the host, so it’s necessary even if you’re the one renting the property short-term.