Short-term letting has become a genre of its own: guests staying a few days, online booking, a key box, cleaning between stays. Many people, however, took out their home insurance on the day they moved in, for a home they used themselves, and have not checked since what the policy conditions say about how the property is used. As a broker, I see that a good share of landlords regard the rules on long-term letting as the benchmark – yet in the insurer’s eyes letting as accommodation is a different risk, and the policy conditions treat it differently. This article covers what you have to report, what happens if you do not, what you can expect from a standard policy, and which layers make up sensible protection. The rules on long-term letting are described in the article for landlords – here I cover only where short-term letting differs.
- In Hungarian home insurance conditions, short-term letting of the accommodation type is typically a material circumstance that must be reported: several policy conditions exclude it, others cover it with a separate endorsement – the rules for long-term letting cannot automatically be carried over to it.
- If the letting was not reported, the insurer’s obligation to pay does not arise under Section 6:452 of the Hungarian Civil Code (Ptk.) – unless you prove that the undisclosed circumstance did not contribute to the loss: with storm damage this typically succeeds, with a fire caused by a guest it does not.
- Damage by guests, theft without signs of forced entry and liability for a guest’s injury are typically left out of standard home insurance; a separate endorsement, the platform’s host protection programme and the guest’s own liability for damages provide a layered solution.
Why is Airbnb different from a long-term let?
An insurer takes on a risk, and the risk depends on how the property is used. With a long-term let, a known tenant lives in the flat and looks after it as their own home. With short-term letting, strangers frequently come and go, often without the landlord ever meeting them; the key is in a code-locked box; the flat stands empty between stays; the furnishings are used more intensively; and the activity is commercial short-term letting / accommodation services, with its own rules on notifying the authorities. That is why Hungarian home insurance conditions typically have a separate rule for accommodation services: with some insurers it is an excluded use, with others it can be covered subject to notification and an additional premium, and several insurers offer a separate endorsement for it – this varies from insurer to insurer. If you do not live in the flat yourself, the policy may in addition fall under the stricter rules for properties that are not permanently occupied; the logic of this is explained in the article on extended absences.
What the law says: disclosure and reporting changes
Under Section 6:452 of the Hungarian Civil Code (Ptk.), the policyholder must disclose, when the contract is concluded, the circumstances that are material to the insurer’s acceptance of the risk, and must report any change in material circumstances in the manner and within the deadline set out in the contract. The way the property is used – your own home, a long-term let, accommodation – is typically such a material circumstance, and policy conditions typically also name letting explicitly among the changes that must be reported; the general procedure for reporting is described in the article on changes in your details. In response to the notification, if the risk has increased significantly, the insurer may, under the insurance chapter of the Ptk., propose an amendment to the contract or terminate it; if it does neither, the contract remains in force with its original content. Under the law, the consequence of failing to disclose or report is that the insurer’s obligation to pay does not arise – unless the policyholder proves that the insurer was aware of the undisclosed or unreported circumstance when the contract was concluded, or that the circumstance did not contribute to the occurrence of the insured event. This contribution rule matters a great deal in practice: a hailstorm hitting the roof is no different because a guest slept in the flat, whereas a fire caused by a candle a guest left unattended stems precisely from the unreported use. The burden of proof, however, is on you, so failing to report is likely to turn the claim into a disputed one.
What can you expect from a standard policy if you have reported it?
If the insurer maintains the policy after the notification, the basic perils – fire, storm, escape of water from pipes – typically remain insured events. The losses specific to short-term letting, however, typically fall outside cover:
- Damage by guests. Under standard policy conditions, damage caused by a person lawfully present in the property is typically not an insured event; it is not a burglary and not a storm, but the conduct of a contractual partner – this is a matter of a damages claim against the guest.
- Theft without signs of forced entry. Burglary cover requires forced entry and documented security measures, so it typically does not pay for items taken by a guest who got in with a key. The rules are detailed in the article on burglary.
- Injury to guests. Personal liability insurance is for damage caused in your private life; liability for harm suffered by a guest in the course of commercial accommodation services is typically excluded or a matter for separate cover.
- Guests’ belongings. A guest’s own belongings are not your insured property; if they go missing or are damaged, that is a matter between the guest and the landlord.
The endorsement and the platform’s protection: two layers, two logics
Some Hungarian insurers offer a separate endorsement for short-term letting. One publicly available example of such an endorsement also accepts as a rental agreement a transaction concluded on the well-known online platforms that records the booking details; it covers liability losses caused by a guest neither intentionally nor through gross negligence, loss of rental income due to a technical fault in the flat or a utility outage, and home assistance services; it excludes damage caused by a guest’s unlawful, intentional or grossly negligent conduct, as well as cash and special valuables; it applies an annual and a per-claim limit and a percentage deductible with a minimum amount; and it requires, as a condition, that the landlord also reports the loss to the booking platform and provides proof of the booking and the agreement. The exact content varies from insurer to insurer – the point is that the endorsement does not pay for every kind of guest behaviour, only for specific, documented situations.
The other layer is the platform’s own programme. Airbnb’s protection for hosts (AirCover) has two parts: the damage protection for damage caused by guests is not an insurance contract but the platform’s own commitment, while liability for a guest’s injury is covered by liability insurance arranged by the platform with a third-party insurer – the terms of both are set by the platform, which can also change them: an upper limit set in dollars, its own exclusions (for example normal wear and tear, cash, intentional damage), its own procedure and deadlines, and, for damage protection, typically a step requiring you first to ask the guest to pay for the damage. It is a usable layer, but it does not replace home insurance: it does not cover the basic perils, and you do not decide when its terms change.
The guest’s liability and the deposit
Under Section 6:519 of the Ptk., anyone who unlawfully causes damage to another must compensate it – this applies to guests too, regardless of whether any insurance pays. The practical question is enforceability: the platform identifies the guest, the booking records the stay, and a photographed handover and return documents the condition. The personal liability element of some guests’ own home insurance may also extend to damage caused at accommodation – this depends on their policy, not yours. A deposit or security payment is not insurance: some platforms do not allow a traditional deposit and prescribe their own procedure for settling damage.
What to do in practice
- Read the sections of your policy conditions on how the property is used, on letting and on accommodation services, including in the chapters on exclusions and on changes that must be reported.
- Notify the insurer in writing of the short-term letting and ask for a written reply: whether cover remains in place, with what additional premium, and whether an endorsement is needed. Reporting is your obligation, and no one else can take it over.
- Document each stay: photos of the condition before handover, an inventory of the furnishings, and high-value items kept separately or locked away.
- Check the contents sum insured: a flat furnished for guests is often worth more than the figure you entered when you took out the policy.
- Sort out the non-insurance requirements too: registering the accommodation service with the authorities and the condominium’s rules are not the insurer’s business, but lawful operation may be a condition of cover under the endorsement.
- In the event of a claim, the primary route for reporting it is the insurer’s claims line; for theft, a police report, and for damage handled through the platform, the platform’s own reporting procedure are also part of the process.
If you let me know, I prepare a comparison of offers with an endorsement and offers designed for accommodation use; the notification and the declarations, however, have to be made by you – I cannot do this in your place. In a stuck or disputed claim I help where I can – I act on the client’s behalf and do not provide legal representation.
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Sources
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:452 – duty of disclosure and duty to report changes; Section 6:519 – liability of the person causing damage
- Colonnade – Short-term letting supplementary endorsements (home insurance endorsement example)
- CoverMe – Airbnb home insurance (market overview, limits of platform protection)
- Government Decree 239/2009 – conditions for providing accommodation services
