THOUSANDS of people cashing in on Airbnb and couch-surfing trends are at risk of huge bills if things go wrong, with experts warning that mortgages and insurance policies could be invalid if people let their homes on a short-term basis.
Insurance cover for theft or damage could be rendered void if hosts do not check with their insurance firms, GoCompare said, adding that many policies did not include a public liability clause which provides cover should someone injure themselves while on private property.
Premiums for household buildings and contents insurance are partly based on who lives in the property.Ben Wilson from Gocompare.com
Sites that are part of the growing “sharing economy” movement such as Airbnb, which has more than 1,000 properties listed for rent in the UK, allow people to earn extra income from their homes by renting out a spare room or even an entire property on a short-term basis.
Some “hosts” use the service occasionally – when they are on holiday or staying elsewhere for a short period of time – while others rent out a spare room on a regular basis.
Ben Wilson, from Gocompare.com home insurance, said: “Airbnb and other social travel websites have become hugely popular in recent years.
“But welcoming paying guests into your home, without first checking the implications for your home insurance, lease or mortgage, could be a costly mistake.
“Premiums for household buildings and contents insurance are partly based on who lives in the property and what the property is used for – whether it’s just your family home or you also run a business from home.
“Your insurer will want to know if you plan to let out your home in part or entirely, even on a short-term basis, and may refuse cover, charge an extra premium or put restrictions on the cover provided.”
He said that some insurers could refuse cover for theft from a property unless there were signs of a break-in, meaning that anything taken by a “guest” would not be paid for. Mr Wilson said you should also check whether you have public liability cover with your home insurance which generally covers you if anyone injures themselves on or around your property.
“If you don’t tell your insurer and need to make a claim, for example for damage to your walls, plumbing or furniture, or for a theft from your home, then your insurer may refuse to pay the claim and your insurance could be invalidated,” he said. “While being a home-host can be a good way of generating extra income from your home, it could also severely damage your household finances.
“Therefore we strongly advise people to contact their insurer, landlord or mortgage provider before welcoming any paying guests.”
A spokesman for the Council of Mortgage Lenders said: “With Airbnb being such a new thing, there is not really an industry-wide standard yet, so we would urge people who are considering doing this, or indeed who are having anyone different living in their house, to speak to their mortgage lender.”
He added: “If it is something people are doing for a few days a year or when they are on holiday, it is not likely to be too much of a problem, but for anything more long-term, it may be that they would need to convert their mortgage to a buy-to-let mortgage.”
Airbnb has come under fire from authorities in some parts of the world where it has been accused of falling foul of local rules relating to short-term rentals.
In New York, for example, there is a law to stop owners or tenants from renting out their apartments for periods of less than 30 days unless they are also living in the property.
Airbnb was not available for comment.
SCOTSMAN TABLET AND MOBILE APPS