Insurance Helpline | Risk for Jamaican homeowner as Airbnb host
QUESTION: I understand that the Government will soon sign an agreement with Airbnb. That company, according to information on its website, is an "online marketplace and home-stay network that enables people to list or rent short-term lodging in residential properties". My wife and I live in a four-bedroom house in Norbrook, St Andrew. We are thinking about registering as hosts and making two of the bedrooms available to short-term visitors. What are the insurance implications? The house is not currently insured.
-M.E.M, Kingston 8.
A few weeks ago, I read an article in the Miami Herald about the misfortunes of a 71-year-old Haitian technocrat. It said that for "three decades, (he) lovingly grew the majestic mahogany and cedar trees, creating a lush canopy in his childhood hamlet, the place where his parents eked out a living from the earth" in Haiti's southern peninsula, the breadbasket of that country.
"He planted his first tree, a mahogany, on May 2, 1989, a year after his father died. Over the years, he planted 2,699 more, along with 1,000 cedars, all without using an ounce of fertiliser."
In addition, he invested US$300,000 (J$38.5 million) in restoring his family home a four-bedroom house with four full bathrooms. When Hurricane Matthew made a direct hit with 140 miles per hour winds, the forest that he had established and the family house were almost totally destroyed.
No insurance was available to cushion the double blow he suffered.
Many local householders, like the retired technocrat, tend to place very little importance on insurance. They behave as though bad things cannot happen.
Thanks for raising a topical and intriguing issue about a subject some prospective hosts may ignore. Two things struck me after I read the release about the meeting between Airbnb executives and the tourism minister. The first is that the online platform said "they were responsible for bringing in roughly 32,000 tourists" to Jamaica within the past year and believe the collaboration with the ministry will allow this number "to grow exponentially".
The second thing was that their website "currently accounts for 2,300 active hosts and 4,000 active listings."
In plain English, this means that there are currently 4,000 facilities available for short-term rental around the island. How many of these active and prospective hosts are aware of the risks that they face? Two groups of risks are associated with hosting foreign guests.
One involves the possible loss of or damage to the hosts' property when parts of the facilities are occupied by guests. Airbnb provides what it calls a "US$1,000,000 guarantee to hosts". According to information on its website, the guarantee "protects your home and your stuff from accidental damage. Every host with a listing on Airbnb is eligible for coverage at no additional cost".
The guarantee is actually insurance coverage that protects the buildings and contents against damage caused by Guests.
Injuries suffered by guests while on the premises for which the host may be legally liable is in the second group. Not many persons are aware of a law called The Occupiers' Liability Act, 1969. It regulates "the duty which an occupier of premises owes to his visitors in respect of dangers due to the state of the premises or to things done or omitted to be done on them."
Section 3 (1) says "An occupier of premises owes the same duty ... to all his visitors, except in so far as he is free to and does extend, restrict, modify or exclude his duty to any visitor by agreement or otherwise. The common duty of care is the duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there."
A case heard in the Supreme Court in 2006 provides an example of the liability imposed by law and an illustration of one of the many things that can go wrong. A small local hotel was ordered to pay a guest the sum of $281,490 plus interest at the rate of six per cent per annum from January 1998 under the provisions of act. The guest fell while using the bath and suffered injuries. The court ruled that the premises were not "reasonably safe" when the incident occurred. North American guests are notorious about getting someone to pay when they are injured.
Many of the legal liability risks connected with being a host can be transferred to an insurance company.
I suggest you contact a representative or your insurance broker to find out what is available and what the costs are before you sign up on the dotted line.
To be forewarned is to be forearmed a statement that would no doubt resonate with the Haitian technocrat.
• Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: firstname.lastname@example.org.