Does your home and household insurance policy provide cover when you rent out the house?
The KKNK, a well- known national Arts Festival started on Saturday in Oudtshoorn. Our neighbours decided to give the Festival a skip this year and headed off to Europe for a brief vacation. They decided to rent out their home to a production team from Cape Town and it appears that the new inhabitants are having a ball!
On Sunday morning at 1h30 am the music and laughter still kept not only us awake but also the neighbours on our other side. We can only hope that keeping the neighbours awake at night is the only damage to be caused…
What do we need to know about renting out the house and what is the effect on home and household insurance?
It is important to remember that the home and household insurance policy is an agreement between you and the insurer based on specific facts on which your risk profile is calculated. It is also your duty to inform the insurer of facts or changes that might alter your risk profile.
With this in mind I approached a few of the experts from OUTsurance with questions about what to do when you consider renting out the house:
Should you be the insured policyholder for home and household insurance – would you need to notify the insurer of such an event?
You would need to inform your insurer about this as it is a material change to the risk and thus the cover that is applicable.
The chances of us covering this occurrence is very slim as the risk is so much greater with strangers being in the house and having unlimited access to all parts of the property.
When does the need arise…if it does arise… to inform the insurer that someone else is living in the house?
Whenever there is a change such as the example above, the insurer would need to be informed.
The example above would be treated very differently from an instance of a friend housesitting.
However all material changes should be referred to the insurer for a decision to then be made on whether there is cover or if there are restrictions on cover.
When does your home and household insurance policy become more of a business insurance policy – such as that of becoming a guesthouse?
Usually where there is a room being let out in the property with the person sharing common ground with the family such as meals and tv room etc, the house is a guesthouse. This can still sometimes be covered under the client’s personal policy.
It is best though when there is a change such as a room being let, that the client call the insurer to determine if there is going to be a change and if the policy should be changed to a business policy for full cover.
Conclusion
It is always best advice to communicate with your insurer or broker and to avoid any assumptions and uncertainties. Even though the insurance premium might remain the same, both you and the insurer will have peace of mind that there is always a full disclosure of all the material facts to the insurance cover provided.
As home owner also be aware of your obligation to inform the inhabitants of the home of the required security measures such as alarm systems that may need to be switched on when they leave the house!
