How SGUA Protects Income for Holiday Homes and Short-Term Rentals

The Australian short-term rental market has boomed, with platforms like Airbnb and Stayz making it easier than ever for investment property owners to generate income from their holiday home or second property used for short-term rentals. However, with this opportunity comes a unique set of risks. Unlike a traditional long-term rental property, a short-term rental is a different kind of business, and standard home insurance policies generally do not provide adequate protection.

This article will explore how SGUA's specialised holiday home insurance provides peace of mind by addressing the unique risks of the short-term rental market, with a particular focus on the crucial element of rent loss insurance.

The Perils of Underinsuring a Short-Term Rental

Many investment property owners mistakenly believe their regular landlord insurance or home insurance will be enough to protect their holiday let. This is a common and dangerous misconception. Standard landlord policies are typically designed for residential use and often have clauses that exclude business activities. If a claim arises from an incident involving a paying guest, the insurer may deny the claim, leaving the investment property owners with significant financial costs.

This is why a specialist insurance policy, like SGUA's, is a must-have for anyone with a holiday property. It's not just about covering property damage, it's about protecting the rental income that makes the investment a good investment in the first place.

The Income Protection Gap for Short-Term Lettings

When a long-term tenant on a written lease stops paying rent, landlord insurance often provides a form of rental income protection. The claim process is relatively straightforward, as the financial loss of rental income can be clearly quantified from the lease agreement.

For a short-term rental, the situation is far more complex. There is no single tenant or long-term lease agreement. The income is a stream of smaller payments from different paying guests staying for no more than three months. This is why a standard rent loss insurance policy may not qualify for the short-term market. What happens if a fire makes the property uninhabitable for a month during the peak season? The property investor would lose a significant amount of income from multiple bookings.

This is the income protection gap that SGUA’s holiday property insurance is designed to fill. We understand that rent is earned on a short-term basis, and our policies are structured to reflect that reality.

How SGUA's Specialised Cover Protects Your Income

SGUA's holiday property insurance goes beyond standard cover, providing specific protection for the financial viability of a short-term holiday rental. Here are some key ways it works to safeguard income:

• Loss of Income Due to an Insured Event: Our policy can provide cover for a loss of income if the property becomes uninhabitable due to a covered peril like fire, storm, or deliberate damage caused by a third party. This ensures that even if bookings are cancelled, owners are not left out of pocket for an extended period of time.
• Deliberate Damage and Theft Coverage: Unlike some platforms' host guarantees, which have policy limits, our policies provide robust protection against deliberate damage and theft by guests or third parties. This includes the costs of repairing property damage that could render the property unusable and lead to lost bookings.
• Public Liability Cover: In a short-term rental, there's a higher risk of someone getting injured on the property, which could result in a public liability claim. Our policies offer comprehensive public liability cover, which helps with legal fees and expenses. This is crucial, as a major liability cover claim could result in a significant financial strain that disrupts the income stream.
• Flexible Policy Options: We recognise that every holiday home is different. That’s why we offer tailored policies that can include optional add-ons to cover unique risks, from pools to other high-value items, ensuring that the sum insured is appropriate for the property’s specific features.

By providing this specialised protection, SGUA helps mitigate the financial risks associated with short-term lets.

A Partnership Built on Protection

At SGUA, we pride ourselves on being a go-to specialist insurance company for brokers. Our streamlined online platform makes it easy to get a quote and manage holiday property policies, allowing you to handle a higher volume of business with less administrative time.

Ultimately, protecting a secondary or investment property isn't just about covering the physical structure. It's about securing the rental income, which is the very purpose of the investment. With SGUA, you can provide a specialist insurance solution that addresses the specific needs of the holiday home market, ensuring your clients can rest easy knowing their income is protected.

Visit our website or contact us today to learn more about our specialised short-term holiday property insurance.Important Notice: General advice provided on this document/website does not take into account your objectives, financial situation, or needs. Please read the relevant Product Disclosure Statement, Financial Services Guide and Target Market Determination available from us to consider whether our product is right for you. Benefits are subject to terms and conditions, including excesses, limits, and exclusions of your policy.