Managing risk during the Covid-19 pandemic: Louise Birritteri, Pikl

UK: Louise Birritteri, CEO and founder of sharing economy insurance specialist Pikl, speak to ShortTermRentalz about the current coronavirus pandemic, and managing risk in the short-term rental sector.

It is a gross understatement to say we are facing into unprecedented times. First and foremost, the coronavirus pandemic is a tragedy and our hearts go out to anyone who is affected by this illness or has lost a loved one.

At Pikl, we care deeply about the short-term rental market and preserving the things that everyone in this industry loves. Covid-19 has severely impacted our lives and we hope we can all help each other get through this safely.

I think it is fair to say that the ongoing crisis has prompted everyone operating in the short-term rental market, as well as guests who choose this type of accommodation, to have a far more heightened awareness of risk and be looking more closely at their rights in terms of cancellations and the insurance cover their policies offer.

Simplistically speaking, this crisis has focused us, as an industry, on four key insurance areas:

  • Travel insurance – guests’ coverage for cancelled trips, flights and delays returning from visits abroad
  • Business insurance – cover for businesses for lost earnings, the impact of staff shortages, supply chain shortages and business continuity issues
  • Cancellation rights – the protection hosts and guests have within the short-term accommodation contract they have, which is often with a booking platform
  • Host insurance – coverage for property damage and liability when short-term guests stay at their rental property

In the vast majority of cases, insurance products exclude cover for viruses such as coronavirus. The scale and impact of a pandemic means that that even the largest collective of global insurance companies is not able to manage the costs of claims.

The worldwide economic effect of this pandemic is forecast by the United Nations to reach into trillions of dollars.

In these situations, [as with war, which is also excluded from insurance policies], it is necessary for governments to step in to support the economy, as governments are the only institutions large enough to collectively manage the economic scale of this crisis.

At Pikl, we specialise in Host Insurance and our policies align with the rest of the insurance industry in not providing cover for contagious or infectious diseases or viruses such as Covid-19. This means we would not cover a hosts’ liability for transmission of coronavirus or any extra cleaning costs associated with this outbreak.

However, we are keen to do our bit to support the NHS and key workers who are working tirelessly to fight this pandemic. That is why we are supporting the STAA-led NHS Homes scheme which provides free accommodation for NHS workers who need it to reduce their commuting times or enable them to isolate away from family.

We are providing free insurance [worth £25,000] for 500 homes participating in this initiative, which we hope in a small way says thanks to both the NHS workers and the hosts and property management and services companies supporting the scheme.

This crisis has had a major financial impact on many businesses but severe risk is not confined to extraordinary events like the current pandemic.

An incident like a fire at someone’s rental property could equally have a huge impact on their business. I am always saddened that so many people operating a business do not mitigate against risk by having the right insurance in place.

Maybe now is the time for them to take a closer look at it. Last year, we conducted a survey amongst 90 per cent of the UK insurance market to find out how they dealt with various scenarios in the short-term rental and home-sharing market.

The report, ‘Insurance in the sharing economy – 2019 property focus’, found that:

  • 100 per cent of home insurers do not cover short-term rental situations as standard
  • 39 per cent of insurers would void and cancel a policy with immediate effect if short-letting was taking place
  • A further 54 per cent would allow the policy to remain active for 30 days of short-letting, but would not provide cover for any incidents arising from it
  • Less than 30 per cent of hosts had told their insurer they were short-letting

It is critical that, when arranging insurance, hosts have the right conversation with their insurer about short-letting. And, they must not assume that because they have told their insurer about their short-let plans and they have provided a quote, that they are actually committing to providing the right cover for the short-let.

The key risk covers that hosts need to check are in place with their insurance provider for short-letting are:

  • Fire caused by a guest
  • Escape of water caused by a guest, such as leaving a tap on
  • Accidental and malicious damage to property by a guest
  • Theft by a guest
  • Legal liability for guest injuries and property damage, for instance if a guest damages a neighbouring property
  • Legal expenses to pay for the cost of solicitors if there is a legal claim

In addition to these covers, people should beware of policy excesses, minimum claims limits and general cover limits. Some insurers may include a high minimum claim limit, i.e. a claim must be for more than £1,000 before the insurance will pay up, some may say they cover things like malicious damage but in actual fact only cover this up to a limit of £5,000, which will not go far if a guest has completely trashed a property.

Hosts also need to make sure they fully understand the marketing guarantees offered by the larger booking platforms.
These guarantees are not insurance products and provide very limited support if something goes wrong. Hosts do not have the same rights and protection in place as they would with a regulated insurance product and these guarantees should not be considered a substitute for insurance.
As a specialist insurance provider, we provide products directly to individual hosts and we can work with property managers and OTMs to provide proper insurance cover for whole portfolios. We have teamed up with a panel of well-known insurers like Axa and Hiscox to get customers the best product and price for their short-let needs.
In addition to the key risk covers mentioned earlier, our cover incorporates extras like guests losing keys, alternative accommodation for guests, abuse of utilities, bug infestations, eviction of overstaying guests and support with legal issues such as with HMRC or council.
With the next few months being uncertain for many, I am confident that our industry will recover strongly. Having the right insurance in place will give hosts the peace of mind they will need to return to earning income from their short-term rentals.

For more information, visit the Pikl website here.