Important insurance tips for Airbnb hosts this Tourism Month

Cape Town - With the cold weather easing off, Airbnb hosts across the country are preparing to usher in the busy end-of-year period and get Tourism Month (September) off to a promising start. Along with any outstanding maintenance checks, now is also the ideal time to revisit your risk management strategy, and with that, the insurance cover you have as an Airbnb host.

This is according Juan Fourie, Head of Santam Hospitality and Leisure (H&L), who says that the ‘Airbnb craze’, like other disruptive, tech-driven business models in the hospitality industry, spread quickly after its launch. “The initial excitement temporarily overshadowed any sense of caution or reservations that prospective hosts may have had. Now, over a decade later, property owners have a better idea of the risks involved and are wisening up on how to safeguard their property, assets and reputation,” he says. 

Airbnb hosting: risks and opportunities

Fourie explains that 2022 was a rebound year for travel in South Africa, as it was in other parts of the world. With lockdown regulations finally coming to an end, property owners could resume their roles as Airbnb hosts. Since then, many have grasped the opportunity to recover their pandemic losses.

“According to a recent report published by Airbnb, in 2022, host earnings amounted to just over R4 billion, with domestic travelers making up as much as 60% of the total visitors. These findings are indicative of the earning potential of Airbnb hosts as well as the growing demand for local, short-term accommodation options,” he says.

Airbnb hosts need to think of themselves not as casual renters but as business owners. And, just like any other business that involves interacting with or welcoming customers onto a business premises, there are certain risks that need to be mitigated.

As an Airbnb host, the rental income you earn may very well be an important part of your livelihood, and that income needs to be protected. By taking measures like making sure your insurance cover meets your unique needs, you can protect the viability of your investment both now and well into the future.”

Protection for your property

Fourie says that the first type of insurance cover to consider is building and building contents insurance. Like any other dwelling, he says that an Airbnb is susceptible to damage from unexpected accidents and severe weather events. “Water damage, fire, a burst geyser – any one of these events can cause substantial property damage that will need to be repaired promptly to avoid losing any more potential income.”

In addition, as Fourie elaborates, “Airbnb owners have a bit more to think about in that an untimely incident could damage guests’ belongings. In these cases, not being able to make the necessary repairs or replacements can not only lead to legal issues but can also result in an altogether unpleasant experience for the host and the guest.

And, in an industry that relies heavily on guest reviews, hosts simply can’t afford to shoulder the fallout that could occur when a negative review is posted online. For this reason, we offer our clients the option of adding guest belongings to their building contents insurance policies where necessary, as an additional safeguard.”

Liability coverage as a proactive safeguard

By hosting guests, Fourie cautions that Airbnb owners are also vulnerable to third-party liability risks. “A lot about an Airbnb stay can go right, but unfortunately, so much can also go wrong, and there’s no way to predict when an accident will occur. If a guest is injured in any way while staying at the Airbnb, the host may be held legally liable,” he says. 

Consider, for example, the implications of having a guest trip and fall, and injure themselves badly during their stay. In instances such as these, guests may hold the host liable for the related emergency and medical costs and may also initiate legal proceedings against them.

“By taking out liability insurance, Airbnb hosts will have peace of mind that if something unfortunate should happen, they won’t have to cover the costs out of pocket while also trying to mitigate any reputational damage,” Fourie says. 

He adds that by working closely with an insurance adviser, Airbnb hosts can gain access to insightful advice on how to avoid unnecessary accidents by taking measures such as installing proper signage, cautioning guests against any hazards and ensuring that all safety and compliance checks have been carried out timeously.

Keep that rental income coming in

For Airbnb hosts who depend on the rental income they earn to sustain themselves, any form of business interruption can be financially devastating. This could take many forms, such as crime events like an armed robbery or something as simple as a last-minute cancellation.

“From the outset, it’s important to chat to your insurance adviser about what their offering is for Airbnb’s. In the case of Santam, there will be a range of options in terms of types of policies and cover. As an example, opting for our Tourism cover includes cover for business interruption. By taking a proactive approach to insuring your Airbnb property, you can protect your income and assets while maintaining the confidence and the sense of security you need to keep your business running smoothly, no matter what challenges arise,” says Fourie.