Need to know
- 'Extended leave' is generally defined as leaving your home unoccupied for at least 60 days
- If you don't inform your insurer, you may not be covered, or may have to pay an excess if something happens
- Even if you have a house-sitter or Airbnb guests, you may still need to tell your insurer
If you're planning an extended trip away from home, perhaps that long-awaited overseas adventure or a sabbatical to a holiday house, then the issue of home insurance is something to add to your to-do list before you go.
We take a look at what insurers mean by 'extended leave', what happens if you have a house sitter or Airbnb guest, and what the risks are of not telling your insurer you're away.
Should I tell my insurer I'm going on an extended holiday?
"Most definitely yes," says CHOICE home insurance expert Daniel Graham.
"Almost all insurance product disclosure statements (PDS) will include the requirement that you inform them if your home will be unoccupied, typically, for 60 or more days," says Graham."They will then either say, 'We won't cover you for that time' or 'We'll make you pay an additional premium or excess if something happens to your home during that time.'"
Most of the policies in our home and contents review require you to tell your insurer if you're away for 60 days or more, a few give you 90 days away without having to let them know, and one gives you 180 days where you're still covered by your regular policy.
Always tell your insurer that you're going on an extended holiday, or you risk voiding your cover.
How does extended leave affect the conditions of your policy?
Companies that cover extended leave generally require customers to pay either a higher premium or a higher excess for that period, according to Lisa Kable, spokesperson for the Insurance Council of Australia.
Depending on which company you're with, she says, you may also need to meet other requirements, such as having someone to mow your lawn, collect your mail and regularly check in on the house.
And it's not just people travelling overseas who may need extended leave on their insurance. Kable says it can also apply to retirees taking long trips around Australia, renovators, people receiving long-term medical care in a hospital or a rehab centre, and people who've moved out while trying to sell or rent their property.
Can an insurer deny your claim during your extended leave?
According to Daniel Graham, they can. But it also depends on your insurer.
"If you haven't informed your insurer and met your duty of disclosure responsibilities," he says, "they can either not cover you at all, or not cover you for certain events, such as theft or leaks, or they can charge you an additional excess on top of what you're already paying.
"It comes down to a case-by-case basis."
Why does it matter if there's nobody at home?
An empty house isn't just a bigger risk for insurance companies, but also for owners, according to Lisa Kable.
There are three main risks an unoccupied house presents, she says: vandalism; theft; and damage from weather-related events such as storms, floods, cyclones, bushfires and blizzards.
A house that looks empty is tempting to thieves. According to data from the Australian Institute of Criminology thieves look for signs that a house is unoccupied. These include:
- Rubbish bins left out on the curb
- No lights turned on at night
- No cars in the driveway
- Uncollected mail
- Overgrown garden or lawn
Aside from break-ins, Kable says another risk for an empty home is if something goes wrong.
Damage from a leaking washing machine, burst pipe or severe weather might not be discovered for weeks or even months. This raises the risk of a small incident blowing up into something more serious while you're away.
The good news, says Kable, is that you can usually make a claim within 12 months of the damage happening, and in some cases up to two years.
I rent – do I need to tell my landlord I'm going away?
As a renter, you're not responsible for taking out insurance to protect the property, but you may have your own contents insurance.
Read through your PDS carefully and tell your landlord if you're going away for a long period so that you don't invalidate your own property insurance.
Is my home classed as 'unoccupied' if I have a house-sitter?
"[Your insurer] might consider that if you have a house-sitter, then it's therefore occupied," Graham says. "It comes down to the way the insurer defines 'occupied' and often if someone is eating, sleeping and living in your home, then it's occupied."
Kable says owners can often nominate their house-sitter to their insurer to make a claim on their behalf while they're away.
Find out if your insurance provider classifies Airbnb guests as 'occupants' while you're away.
Do Airbnb guests make my home 'occupied'?
The short answer, according to Graham, is that it depends.
"It's a business situation," he says. "A lot of home insurance products haven't evolved into the new world that we live in where people rent out their spare room or their whole house when they go on holiday.
"A lot of insurance products still treat your property as something you live in or rent out as a landlord in the traditional sense.
"If you're planning to have Airbnb guests stay in your home for some or all of your extended holiday, you must discuss it with your insurance company, advises Graham, as most PDSs have little to no detail about Airbnb."
According to Kable, an estimated 140,000 home owners who rent their property short-term risk being left uninsured unless they take out insurance specifically for that purpose.
"A home building or contents claim incurred while a property is being rented on a short-stay holiday rental basis may be declined, leaving the owner open to financial loss and other liabilities," says Kable.
Most insurers regard online and short-stay holiday rentals as a business activity
Lisa Kable, Insurance Council of Australia
"Most insurers regard online and short-stay holiday rentals as a business activity. I have heard frightening stories of home owners returning after short-stay holiday rental guests have departed to find a completely empty house or that their home has been used for illegal activities.
"These examples illustrate the importance of the home owner being aware of their home's insurance cover, what is included and what is excluded.
"Home owners that choose to short-stay holiday-let their home can purchase an additional home policy that is relatively new to the market that covers short-stay holiday rental."
Undelivered mail can advertise your absence to burglars, so make arrangements in advance.
Awareness is key
According to Kable, one of the challenges around extended leave and insurance is that most people are simply unaware it's an issue.
"It's all about educating consumers," she says. "It comes down to people reading their PDS in detail, preferably before they purchase the policy to ensure it suits their individual needs."
But, as CHOICE's Dan Graham says, PDS documents aren't typically an easy read.
"We know that people very frequently don't read their policy documents," he says." They're often very long documents, they're confusing, they're written in complex legal language and people just don't have the time to get their head around all the details.
"This is something that would really come up on an ad hoc basis, so it's not something you're likely to do often."
As with most forms of insurance, the devil is in the detail. So it's worth taking the time to read through your policy or talking to a company representative about it and what you need to do to make sure your home and valuables remain covered.
- Read your policy carefully well before you leave. If anything is confusing or unclear, call your insurance company to talk it through.
- Give your insurance company your holiday dates as far in advance as possible.
- If your insurance company has any requirements (such as having someone collect your mail or mow the lawn), make arrangements with a friend, neighbour or professional service for the time you'll be away.
- Consider installing a security alarm or security camera.
- Consider turning off your water at the mains.
- Take basic details of your insurance with you on your holiday, such as your membership number and the name of your plan.
- Make sure you have all agreements with your insurer in writing.
Visit understandinsurance.com.au, part of the Insurance Council of Australia, for more tips.