Strata Insurance Considerations for Airbnb & Short-Term Holiday Rentals

Insurers' Stance on Short-Term Holiday Rentals

Insurers generally have a positive outlook on short-term holiday rentals for two reasons. Firstly, data shows these rentals do not significantly increase risk or claims. Secondly, insurers avoid placing an undue burden on Body Corporates or Owners Corporations, as it might be challenging for committees to monitor every lot owner's property usage.

Disclosure Requirements for Insurance Policies

When taking out an insurance policy, a strata building must disclose the level of occupancy associated with holiday letting. This entails informing the insurer about the number of lots engaged in holiday rentals or providing a percentage of the total floor space used for this purpose. Full and accurate disclosure ensures that the insurance coverage aligns with the property's specific usage.

Consequences of Non-Disclosure

Failure to disclose the extent of holiday letting could lead to penalties imposed by the insurer. However, in most cases, insurers already offer cover for Airbnb and similar short-term holiday rentals.  In such cases, the penalty for non-disclosure is limited to putting the insurer in the position they would have been had proper disclosure had been made. This for example may only be the additional premium the insurer would have charged.

Adverse Council Orders and their Implications

Strata buildings must also consider any adverse Council orders related to occupancy. If there are orders that indicate improper use of the building or restrictions on short-term rentals, they must be disclosed to the insurer. Complying with Council Orders is essential to maintain a valid insurance policy.

Insurance as a Means of Controlling Property Usage

Using insurance as a tool to compel or force an owner to refrain from short-term letting is not a recommended approach. Committees should explore other avenues, such as engaging with the Council, to address property usage concerns effectively.

Conclusion

In conclusion, the growing acceptance of short-term holiday rentals like Airbnb in strata properties is evident as insurers are now accommodating this trend. Where it is possible, strata buildings should actively disclose the presence of short-term accommodations during policy renewal to ensure proper risk assessment and coverage. While insurance plays a vital role in safeguarding strata properties, it should not be misused to dictate property usage. By acknowledging the changing landscape of property rentals and working together, we can ensure a sustainable and successful future for strata living.

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