This article discusses the implications of short term rental insurance cover when apartments are let using sites like Airbnb.
Question: I’ve been involved in a confusing situation where a sub let (Airbnb) neighbouring apartment caused flooding, which caused water damage to my goods. Should the landlord have short term rental insurance cover?
I’ve recently bought an apartment in a 12 storey building in Melbourne, Victoria. I only received the keys two weeks ago and had no furniture in the apartment other than a mattress as I hadn’t fully moved in yet. I didn’t have contents insurance at the time, as I was planning on getting this when I had furnished the apartment.
A flood originated at the property next door to mine due to a negligent act (tampering with fire sprinkler), which flooded several levels of the property. Water damage has occurred to both my walls and carpets. Wall damage is being addressed under the Owners Corporation insurance, however, the cost to replace my carpets and mattress are on me.
I have subsequently discovered that the next door apartment is being leased to a person (person A), and person A is subletting the apartment on Airbnb. Person B was renting the Airbnb and caused the flooding damage. Person B also happens to have just purchased a property in the same building (confusing I know).
I don’t think I should have to pay for my damaged contents (i.e. carpet and mattress) as I was at no fault. Who would be the liable party – the apartment owner, the leaser who is subletting on Airbnb (person A) or the actual culprit who was renting the Airbnb (person B)? Should there be some type of short term rental insurance cover to pay for the damage?
Answer: We believe the crux of this question is: Who is liable for the damage? There is no clear outcome from an insurance perspective.
We believe the crux of this question is: Who is liable for the damage?
Unfortunately, it is not a straight-forward answer, and there is no clear outcome from an insurance perspective.
From our point of view, however, in this situation, the most logical first port-of-call when seeking damages would be the party who caused the damage in the first instance i.e. the short-stay tenant.
If unsuccessful here, it may then be worth considering the short-stay letting firm, or the property owner who was responsible for leasing the property. These parties may have insurance policies in place that cover their third party liability.
General recommendation when purchasing property
As a side note, we always recommend purchasing appropriate property insurance policy as soon as any property settlement takes place. Once the new owner takes possession of the property, they also take on responsibility for:
- The legal liability within the lot e.g. if a third party suffers an injury the property owner could be held liable,
- Any contents in the lot e.g. furniture, carpets, blinds, possessions etc.
Without the appropriate insurance, a new owner could be left without protection should something happen.
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 License Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website: www.whitbread.com.au.
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- VIC: Q&A – Is There A Maximum Number of Tenants Allowed in Apartments?
- Strata & Airbnb: How to stop airbnb in your building
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