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Does standard landlord insurance cover subletting?

The latest trend in short-term stays is tenants subletting rooms or whole tenancies on popular sites such as Airbnb. This practice can significantly impact on your insurance policy.

It is not uncommon for tenants to sublet a room, whether they advise their landlord or property manager or not. Airbnb has increased the ease with which they can sublet the entire property, particularly if they are going away and don’t want to lose their rental home altogether. If you or the landlord are advised of the tenant’s desire to sublet the property, it is in your best interests to consider your client’s needs thoroughly. You will also need to determine whether the change in the tenancy arrangements will affect their insurance.

Any changes to the tenancy arrangement will need to be legally documented with a new tenancy agreement. You should also discuss them with your insurer or broker, as most landlord insurance policies include a clause that does not allow subletting. However, the issue is broader than just exclusion; subletting dramatically increases the risk of damage to a property and also blurs the lines of responsibility for that damage. In the case of subletting via Airbnb, any damage caused by a guest of the tenant may result in a claim being made by the property owner. The tenant named on the lease would find themselves responsible for damage caused by their guest.

Standard home and contents insurance will not protect against many of the risks that landlords face. Whether it is loss of rent due to an absconding tenant, malicious or accidental damage, or a whole range of other circumstances including tenant hardship, the RentCover range provides peace of mind to property owners – and has done for over 25 years. For more information please visit rentcover.com.au.

EBM’s advice about insurance is provided for your general information and does not take into account your individual needs. You should read the Product Disclosure Statement
and Policy Wording prior to making a decision; these can be obtained directly from EBM.

For more information, or to quote or apply online please visit rentcover.com.au.

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