If you own a holiday home or an investment property, sharing it with others by turning it into a holiday rental can be really rewarding. The extra income might help cover costs such as council rates and insurance, and it’s also a buzz knowing that others get to enjoy the property you love.
At the same time, though, there are more than a few practicalities to take care of – everything from setting the place up to deliver the best stay possible, to deciding which holiday rental booking platform to list with.
It’s likely you’ll also want to make sure that any holiday home insurance you have in place will protect your asset in the ways you need.
If you’re renting through a rental platform, what holiday home insurance do you need?
In 2023, the Insurance Council of Australia (ICA) informed homeowners that certain types of home insurance are more suitable than others for holiday rental properties, and that the host protection insurance provided by rental platforms may not cover all the damages you might expect.1
Yoav Tourel, Chair of the Australia and New Zealand Short Term Rental Association (ASTRA), says assuming that the insurance provided by rental platforms such as Airbnb or Stayz offers complete protection can be risky.
“While these platforms often include some level of coverage, such as host protection or liability insurance, these policies usually have limitations and exclusions,” says Tourel.
“They may not cover every type of risk or provide the comprehensive protection property owners might expect.”
For example, drawing on ASTRA members’ lived experience, Tourel says some damage to the property, theft of personal belongings and specific liability claims could all fall outside the scope of a booking platform’s coverage.
“Relying solely on this insurance could leave significant gaps, exposing owners to potential financial loss,” he cautions.
To understand why, it may help to learn more about holiday home insurance in Australia and what it does – and doesn’t – cover.
How does holiday home insurance work?
When a booking platform does provide a level of cover for rental properties, it typically applies automatically to every listing. “For example,” says Tourel, “Airbnb offers AirCover to all hosts for every Airbnb booking.”
But, as the Insurance Council of Australia points out, renting through a platform doesn’t necessarily cover your holiday rental for all the potential damages you’d expect1 – for example, AirCover’s host damage protection doesn’t currently cover against loss due to acts of nature2 – and any cover that is provided by a booking platform only protects your property while you’re hosting a stay.3
In comparison, Youi holiday rental insurance covers the building and furnishings against loss or damage caused by storm, fire, flood or earthquake, whether or not the property is occupied at the time of the insured event.4
So, in order to protect your holiday rental, you might wonder if traditional home and contents insurance would fit the bill.
“Standard home and contents policies often exclude coverage for short-term rentals, potentially leaving property owners vulnerable to risks such as guest-caused damage, theft or liability for injuries on the property,” says Tourel.
CHOICE, Australia’s leading consumer advocacy group, explains that this can apply even if you temporarily turn the home you usually live in into a short-term holiday rental while you head off on holiday yourself.5
“To protect their investment,” says Tourel, “owners could consider specialised landlord insurance policies designed for short-term rentals.”
So, is it worth getting holiday house insurance?
If you’re asking yourself this, Tourel says, thinking about your current insurance is a good place to start.
“Reassessing insurance ensures owners have adequate coverage, helping to offer peace of mind and financial security in case of a claim,” he says.
Tourel and his team at ASTRA share two steps you can take to help you decide what type of holiday home buildings insurance might suit you and your property.
1: Contact your current insurer
“Start by speaking with your current insurer to understand what your existing home and contents policy covers, particularly regarding short-term rentals,” says Tourel. “Many standard policies exclude or limit coverage for properties used as holiday rentals, so it’s essential to clarify any gaps.”
2: Review the rental platform’s insurance
“Knowing exactly what is and isn’t covered helps in identifying where additional insurance might be necessary,” says Tourel.
“By taking these steps, you reduce the risk of unexpected financial losses.”
How much is holiday home insurance?
As with any type of home insurance, the cost depends on a variety of factors, including where your holiday rental or investment property is located and the level of cover you take out.6
If you’re wondering if there’s anything you can do to lower the cost, Mervyn Hartley, Youi’s Head of Product for Home and Small Business, explains that choosing a higher excess can mean lower premiums for your policy.
“Sometimes these premiums may be significantly lower,” says Hartley. “But remember, it also means that you’ll pay a higher excess if something happens and you need to make a claim. And, for events where the damage isn’t too great, this can even mean paying for the repairs out of your own pocket rather than making a claim.”
“With Youi, you can select one of the excess options offered on your landlord policy to suit your circumstances – and you can change this at any time.”
If you’re looking to share your holiday home with paying guests, consider starting a quote with Youi to discover insurance that’s a bit more you-shaped.
1 Source: Insurance Council of Australia – Short-term rental insurance: essential for holiday homeowners, November 2023
2 Source: Airbnb – Host damage protection
3 Source: Airbnb – AirCover for hosts
4 Exclusions, limits and additional fees may apply. See the Home & Contents PDS for full details.
5 Source: CHOICE – How to make sure your home is still insured while you're on holiday, July 2024
6 Source: Canstar – What does landlord insurance cost in Australia?, July 2023
