How to talk to your insurer - part 1

You’ve taken the decision to let out your house to short term guests. Or maybe you’re going on holiday and you are planning to house swap. Some of you might be landlords considering allowing your tenants to sublet. If you’re thinking about any of these things, it’s vital you have the right conversation with your insurer or you could put yourself at risk.

In the first of this two-part series, we’ll walk you through the things you need to consider when doing this. In the second part, we’ll discuss what to do if your insurer says that they are not prepared to cover you.

You could put your existing cover at risk.

Most mainstream home insurers do not allow short term letting, house swaps or subletting under their policies as these activities are often classed as commercial use or are considered too high risk and are excluded. Make sure you call them first before doing anything so you know what you’re getting yourself in to. It’s possible your insurer may cancel or void your home or landlord policy if you do this activity which means you would not be covered even for claims not related to your guests. It’s therefore very important that you reach agreement with your insurer that they accept you doing this activity even if they do not cover it for you, to remain protected for standard home risks. In some cases, you may need to switch home or landlord insurer to be able to have a valid underlying home or landlord policy in place for standard risks.

Your existing cover might not be enough.

If your insurer does say they are happy to cover you, that is a good first step, but check what that means for your cover for Guests. Key aspects of cover are likely to be missing. Most standard insurance policies do not cover theft unless there has been forced entry and so they are unlikely to cover incidents of theft caused by a guest you have allowed into your home. This means that vandalism or accidental damage is unlikely to be covered either, in addition be aware that third party liability claims and associated expenses are unlikely to be covered either so you may be liable for thousands of pounds if a guest is injured on your property. This is where Inlets cover steps in.

Check your policy wording before you call.

It’s also a good idea to check your policy wording before you call. By doing this it should enable you to be better prepared to ask the right questions and you are more likely to get clarity on the true extent of your cover. Think about the type of cover you think you need and search for any exclusions or restrictions in the policy wording. If the terms are unclear, be specific when asking your insurer as to the cover you are looking for. When they give you an answer, ask where this information is in the policy booklet so you can verify the information. If it isn’t mentioned in your policy wording then it could be something that your insurer is saying they are happy to cover on a case by case basis. For these types of situations, be sure to ask your insurer to confirm this in writing so you have proof that you are covered, in case you need it at a later date.

Don’t rely on Airbnb alone.

If you’ve realised that your Home or Landlords Insurance cover isn’t quite what you thought it was, you might be thinking you can rely on Airbnb’s Host Guarantee and Protection Insurance if you’re listing your property on their website. Whilst this does give you some measure of protection, their cover is limited and this could put you at risk. For more information regarding Airbnb’s cover, look here.

Be upfront.

Nothing is more likely to put you at risk then if you deliberately withhold information. If a claim occurs and your insurer suspects that you haven’t been forthcoming then it’s likely you won’t be covered. In a worst-case scenario, they may void your policy as though it never existed, which could make it difficult for you to get insurance in the future. Be sure to tell your insurer everything they ask for, even if you don’t think it’s that relevant. If you forget to mention something, let them know as soon as possible. Being truthful with your insurer will give you peace of mind that you will be covered if the worst happens, provided you’re happy with their level of cover.

Ask how it will affect your premium.

If your Insurer is prepared to cover you, they are likely to increase your premium due to the increased risk associated with allowing strangers into your house. They could decide to raise your overall premium or charge you every time you allow a guest into your home. If you’re planning to let out to short term guests on a regular basis, make a business plan and ask your insurer regarding the likely premiums of letting your home out so that you can factor these costs into your future earnings. Don’t forget to ask your insurer if a claim for damage caused by a Guest affects your no claims bonus as this is another factor that could increase your premiums. You might be better off not taking the additional cover directly from your insurer but purchasing an insurance top up like Inlets cover.

Decide whether your situation is permanent or temporary.

For those of you doing short term letting on a regular basis, assess how often or for how long you will be doing this. If you plan to do this frequently, ask your insurer if they limit how many times you can have paying guests in your home. If they only allow short term letting on an occasional basis then it’s likely you won’t have the cover you need.

Call your mortgage provider or leaseholder.

It’s also worth noting that most mortgage providers and leaseholders do not cover short term letting either. If you have a mortgage or your property is a leasehold, do your homework and call them as well so you don’t run the risk of voiding your mortgage or leasehold agreement. They may, however be more comfortable if you have taken out appropriate Insurance cover.

Consider extra insurance.

If you’ve done your homework and asked your insurer the right questions, you’ll probably be in a position to know whether your cover is adequate or not. At this point, you may want to consider taking out extra cover with Inlet in addition to your main insurance policy. Be sure to ask your insurer whether they are happy with you doing this. Inlet offer a range of specialist policies designed to cover you if you plan to allow guests in your home.

In the next section of this series, we’ll talk about what to do if your insurer says that they don’t want to keep your cover in place.