Risk of loss or damage to property increases significantly during major tourism and sporting events like international soccer games. Exposure to liability claims from guests and tenants also increases.
“Current cover is affected should you choose to rent your property or part thereof during the Soccer World Cup,” warns Pieter Oberholzer, divisional director at Multinet Insurance Administrators.
Oberholzer lists sections of cover to be affected, regarding the usual categories of house contents, building, motor and personal liability.
“Renting out of property is a business venture for reward, and therefore insurers view it as a material change in risk, aside from what is stated under general conditions of your policy.
“If an owner alters the risk that insurers are currently covering, and do not disclose that to the insurers, the entire section of the policy may be voided by the insurers and any claim that occurs thereafter would not be dealt with.”
Cover provided applies to the policy holder and members of his or her family, normally residing with the policy holder. Other persons are seen as guests and limited cover would apply, assuming the insurers were to accept the new risk as disclosed.
Main exposure would be theft by the paying guests or tenants. Cover for this risk is excluded under the Household Contents section.
Buildings cover generally allows that a private residence may be let, and any act or omission on the part of the tenant would not invalidate cover.
Advise your insurer that your residence is being let in order for them to underwrite the new risk and calculate the premium if they agree to accept the risk.
In terms of the description of use clause. ‘hiring’ is excluded. Should you hire out your vehicle, no cover would be in place, resulting in huge exposures to the owner of the vehicle.
Policy holders are insured persons, whom the risk was accepted for. Home owners considering the renting route should fully investigate any liability that could arise from guests or tenants.
Paying guests or tenants are excluded under this section of cover. It is important to note that a tourist is likely to sue in foreign currency as that is the currency they would have to pay for medical damages or replacement costs when they return to their home country.
You could be sued for injuries should a tenant suffer any kind of loss, injury or damage on your property. This is specifically relevant if there are structures on your property that do not comply with the relevant health and safety legislation and standards set by authorities. Ensure that the correct disclaimers are in place to cover this possibility.
General insurance risk guide
Should you wish to rent your property to tourists, inform your broker and insurer. Cover would be avoided by the insurer if this is not declared.
Should the insurer agree specifically to extend cover, strict underwriting would apply, and result in increased premiums.
Do not be distracted by sports excitement to find yourself caught unaware through lack of foresight and planning. Identify and manage your exposures, advises Oberholzer.
PHOTO; Many tourists prefer small bed and breakfast accommodation in a suburban setting, but lack of risk management, including insurance, expose small operators to large claims an potential closure.