As the popularity of platforms like Airbnb continues to grow, many Residential Management Companies (RMCs) and managing agents are facing new challenges when it comes to property insurance for blocks of flats. With short-term rentals becoming a common occupancy type, it’s essential to understand how these new practices impact your insurance cover and premiums. Champion Insurance Group is here to help guide you through these complexities and ensure your property is adequately covered.

The Importance of Disclosing Material Facts in Property Insurance

When arranging Buildings and Property Owners Liability Insurance, it’s critical to disclose all material facts to the insurer. Material facts are key details about the property and its occupancy type that can affect the risk level, premium rates, and terms of the insurance policy. If the insurer is not fully informed, they may reject a claim for non-disclosure if the undisclosed information comes to light after a claim is made.

How Occupancy Types Affect Insurance Premiums

One of the primary material facts insurers consider is the type of occupancy within a block of flats. The occupancy type can directly influence the level of risk associated with a property. Historically, insurers have classified occupancies into the following categories, each with different risk levels:

• Owner-Occupier
• Working People (Professional Let)
• DSS
• Retired
• Vacant

The make-up of occupancies within a block of flats plays a significant role in determining what premium is charged and what terms are applied. For instance, a vacant property is generally considered a higher risk compared to an occupied one. Vacant flats are more vulnerable to issues such as escape of water, as leaks may go unnoticed, leading to significant damage. Additionally, vacant properties are more susceptible to break-ins, increasing the risk of theft and vandalism.

The Rise of Airbnb and Short-Term Rentals: A New Occupancy Challenge

The rise of short-term rental platforms like Airbnb introduces a new and unique type of occupancy that insurers are still grappling with. Short-term tenants may not treat the property with the same care and attention as long-term residents, increasing the likelihood of accidental damage, higher wear and tear, and disputes with neighbors. This creates a new challenge for insurers, who may classify short-term rentals as higher risk compared to traditional tenants.

As a result, underwriters may apply higher premiums, impose increased excesses, or in some cases, refuse to provide cover altogether for properties used as short-term rentals. This uncertainty can lead to complications, especially if the occupancy type is not disclosed to insurers.

The Risks of Non-Disclosure: Why You Must Be Transparent with Your Insurer

Failure to disclose the correct occupancy type, including short-term rentals via platforms like Airbnb, could lead to claims being rejected. It’s essential to provide insurers with accurate and up-to-date information about the types of tenants occupying your property to ensure your policy remains valid.

Many property owners’ insurance policies include a “non-invalidation clause”, which protects policyholders from penalties if they were unaware of material facts. While this offers some protection, we advise not to rely on this clause as your primary safeguard.

Champion Insurance Group’s Best Practice for Avoiding Issues

To avoid potential issues with insurance claims, Champion Insurance Group recommends regular reviews with leaseholders to ensure all occupancy types, including short-term rentals, are disclosed to insurers. By proactively managing this process, you can prevent surprises and ensure your property is fully protected in the event of a claim.

Why Choose Champion Insurance Group?

At Champion Insurance Group, we understand the complexities of the property owners’ insurance market and have extensive experience in arranging cover for blocks of flats. Our team can guide you through the process of identifying the correct occupancy types and ensure your insurance is tailored to meet the unique needs of your property.

Get in Touch Today for Expert Insurance Advice

If you’re unsure about the implications of short-term rentals like Airbnb on your property insurance, or if you need assistance reviewing your current cover, Champion Insurance Group is here to help. Contact us today at 03330 430 430 or email info@ChampionInsure.co.uk to ensure your property is properly protected and compliant.