Hosting - It doesn't have to be Risky Business
When you open up your home to paying guests, you are also exposing yourself to additional risks.
The cost of your insurance is calculated on many metrics such as postcode and its associated risk profile, age of building, security measures, claims history. Before you start looking for quotes, you should give a bit of thought to your risk management.
Risk management can help you strategically minimise the chance of claims and therefore your insurance costs. There are 4 strategies you can employ:
Risk control
Risk retention
Risk avoidance
Risk transfer
RISK CONTROL
This is where the average property owner can take meaningful action: Reduce the likelihood of claims by taking preventative measures. Have a look around your property and see where you could improve guest safety (and your own). Some of these measures may also reduce your premiums:
Examples:
Non-slip surfaces on paths, around pools, in the bath or shower
Install fire protection measures (sprinklers, alarms, extinguishers, fire blankets)
Install burglary protection measures (window & door locks, alarms)
Have a daily data back-up routine and use cloud services for off-site data security
RISK RETENTION
This is also known as Risk Acceptance or self-insurance. You should consider the break-even point of the cost of insuring against not insuring.
Examples:
Choose a larger excess to take advantage of premium savings (eg: Motor Vehicle or PL)
Totally self-insure (for low-level risks). For instance, there is a low risk of Damage claims in an in-home hosting scenario so maybe you don't need a high level of cover (or any at all) for this
Partially self-insure – only insure the big-ticket part of the risk, such as Public Liability (you could probably withstand a Damage claim, but a PL claim could run into millions, so best insure that part!)
RISK AVOIDANCE
Avoid the consequences of an activity by avoiding that activity. If something is risky, consider getting someone else to do it.
Examples:
To avoid product liability claims, outsource the manufacture of potentially hazardous products
Lease rather than purchase commercial property (renting can avoid the cost of insuring it)
RISK TRANSFER The purchase of insurance is the most common form of Risk Transfer.
Examples:
Insurance transfers the cost of claims to the insurer so it doesn't come out of your pocket
Transfer the liability of hazardous activities by using contractors (but make sure they are insured!) For instance, commercial window washing services
Use of Hold Harmless clauses in contracts (must be done by a lawyer)
DISCLAIMER
This advice does not take into account the reader’s particular objectives, financial situation or needs. For this reason, before you act on this advice, you should consider the appropriateness of the advice taking into account your own objectives, financial situation and needs. Before you make any decision about whether to acquire a policy, you should obtain and read the product disclosure statement for the policy.
To discuss your personal insurance needs, please email veronica@ceneta.com.au
Ceneta Insurance Services Pty Ltd ABN: 78 133 436 254
PO BOX 178 Altona North VIC 3025
Level 1, 96 Wellington Parade, East Melbourne VIC 3002
Authorised Representative No: AR 332815 of PSC Connect Pty Ltd
ABN 23 141 574 914 AFS License No 344648
