As the world turns its attention to South Africa for the 2010 World Cup many South Africans are thinking to cash in on this bonanza by renting their homes, or part of their homes, to tourists.

This, however, "increases the risk of loss or damage to ones property and, more importantly, exposes one to liability claims from paying guests or tenants," warns Gari Dombo, Managing Director of Alexander Forbes Insurance.

If you rent out your home your main asset exposure would be theft by the paying guests or tenants. This is, however, generally excluded from a personal contents policy.

You also run the risk of tenants not paying, a risk not insurable in the short term personal lines market.

Take payment up front

As such, "your best bet would be to take payment up front," advises Dombo.

Homeowners considering the 2010 renting route should 'investigate fully any liability that could arise from paying guests or tenants.'

If tenants are injured by something unsafe on your property or suffer food poisoning while renting your property, "this could result in a major claim against you and not all insurers will provide liability cover for this," says Dombo.

And since tourists are not obliged to sue you here in South Africa you could find yourself being sued in another country where liability awards are likely to be much larger.

Even if your underlying personal liability cover includes liability to tenants or paying guests you are still advised to make sure of your cover with your insurer or broker, cautions Dombo.

While nearly all insurers offer some form of additional liability top up cover, home owners going the 2010 rental route need to be aware that the top up cover is likely to exclude "liability arising out of the letting and/or hiring out of any immovable property, or part of such property for a fee, reward or any other consideration," quotes Dombo.

Disclose fully your 2010 letting intentions

Hence fully disclosing your 2010 letting intentions to your insurance advisor may well save you losing your shorts during 2010.

In fact these risks are not exclusive to 2010, adds Dombo. "Whenever you decide to rent out your home, room or rooms you run numerous risks if not properly covered."

Dombo advises renters to discuss their rental risks with their insurers or brokers to make sure that they have the cover that they need, being sure to "always buy the highest liability cover that you can afford."

Are you renting out your home for the 2010 World Cup? Do you have any advice for readers who plan to do the same? Leave a comment below…

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