Until recently, most New Zealanders’ lives had well-defined boundaries that made it easier for insurers to assess and price risk.
But the sharing economy is changing the way we use our assets and belongings – and blurring the lines of traditional insurance policies.
“The core of the sharing economy is people renting things from each other.” The Economist
Why is the sharing economy blurring lines?
The rise of platforms that allow us to rent out our personal belongings mean that people are now making money from their cars, homes, clothes and even their money.
This raises questions for insurers about when something you own stops being for personal use, and starts to be a commercial asset.
For insurers, the sharing economy changes the amount of risk that assets face and makes it harder to put things into traditional commercial and personal insurance buckets.
For example, a basic house insurance policy covers owner-occupiers on the assumption that only close friends and family will be invited to their home. But listing a home on Airbnb opens the door to strangers staying in the family home, and the risks that come with not knowing who your guests are.
Personal or commercial – why does it matter?
If you’re making money from your assets, especially a car or house, it’s possible a commercial insurance policy will suit your needs better than a personal one. You may not even need to pay more in premiums.
Another option is to check with the platform you’re using to rent out your belongings. Some platforms may offer built-in insurance cover, but it’s important to check the limits and how those compare to your own insurance policies.
Temporary rentals versus traditional tenanted properties
If you’re letting out a home on Airbnb, it’s important to remember that traditional insurance for rental homes may not cover you.
That’s because temporary rentals have more visitors, and fewer checks, compared to a normal tenancy agreement. For example, Vero’s policy defines a ‘tenant’ as someone who holds a tenancy agreement with you that’s not less than 90 days.
Landlord cover often contains conditions around how you select and inspect your tenants that you’re unlikely to be able to meet through platforms like Airbnb, so don’t assume that traditional landlord insurance will cover you.
