Update on short-term rentals in sectional title schemes

In our blog last week, we mentioned various concerns with regards to some insurers’ approach to short-term rentals.

We stated:

“SASRIA (South African Special Risks Insurance Association) do not consider Air B&B or short-term holiday accommodation letting as a residential risk; therefore, it should not enjoy favourable SASRIA premium ratings.”

As of last week, this was the position.

At a recent presentation hosted by NAMA (National Association of Managing Agents) in Cape Town, Ian Barton of FPA (First Property Acceptances) presented the challenges the insurance fraternity faced in dealing with such issues. This certainly caused a stir as well as much debate and discussion over the past few days.

Addsure has also been advising clients to be cautious where short-term letting is taking place. We circulated a notice to our clients a week or two ago in this regard which raised concerns among our clients. Among these concerns, was the matter of SASRIA premium rates.

As a result of the direct intervention of FPA in this matter, SASRIA recently wrote to FPA confirming that, following internal deliberations, they have agreed to treat Airbnb and any other type of short-term holiday letting as RESIDENTIAL OCCUPANCY.

Addsure fully supports the thought leadership on the part of FPA and NAMA’s efforts to disseminate vital information to the sectional title market.   This is a prime example of how government entities (SASRIA is a state-owned entity), business leadership and industry bodies (such as NAMA) can work effectively for the common good.

While the main problem may have been overcome for now, it is our view that owners in schemes where such short-term rentals are allowed, should ensure that they arrange suitable cover for the risks associated with their short-term rental business. Risks like potential liability and loss of income needs should be considered. Their own insurance brokers should be consulted for advice. We suggest that products such as BnBSure or other hospitality insurance risk products are considered.

 

Acknowledgements: Ian Barton, FPA, a division of CIB for research, negotiation, information and input in this matter.

 

Author: Mike Addison, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069