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Going home for Christmas and planning to sublet your Danish home short term?

With only six weeks until Christmas, you may be planning to make a little extra money by renting out your apartment or house while you are away. If you do so, you need to find out if your home insurance covers any damages to your home or property done by the temporary tenants.

By Bente D. Knudsen

Renting out your private home through easy to use sites such as Airbnb, Wimbu or HomeAway is becoming ever more popular also in Denmark.

On average 3 percent of the Danes rent out their property, and especially the 25 to 34 year-old are keen on making a little extra. Seven percent of them do so according to the latest research by Danmarks Statistik.

Renting a private home for a short period is also increasing in popularity, something 10 percent of the Danes do, also here the 25 to 34 year-old are at the top of this trend as 18 percent of them do so.

However, as the sharing economy becomes more popular, the need to tackle the difficult question of, how to insure your home and property when you are letting other people use it, is a pressing issue.

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According to Danish insurance company Alka, there is a lack of recognition amongst those renting out short term of the fact that their home insurance, in Danish inboforsikring, typically does not cover damage or simple theft in the home and to your property when you rent out.

Even if you think you are covered by Airbnb’s so called host insurance of up to DKK 6 million, take note that they do not cover or do not cover in full simple theft of for instance jewellery, cash or arts from your home, or what they call cosmetic damage/wear and tear done to your home or furnishings in it.

According to the Danish insurance association, Forsikring& Pension, it can be a good idea to find out with your insurance company if you can extend your home insurance to cover the short-term rental period.

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For instance, a Danish inboforsikring typically also contains a liability insurance – called ansvarsforsikring in Danish.

This is the part of your home insurance that will cover damages to your neighbours’ homes due to problems in your own.

For instance if you have a water incident with your plumbing and water runs through your floor and into the apartment under yours, then it is typically your ansvarsforsikring, which will cover this damage.

However, your Danish ansvarsforsikring does not cover if the incident took place while you rented out your apartment or house. In this case, you need to find out if your short-term tenant is insured to cover such damages.

Even if some rental sites such as Airbnb do claim to have your home covered by their host insurance, you need to make sure that you understand what is covered and what is not.

For instance, Airbnb’s host insurance does not cover simple theft or vandalism, nor does it cover damage to shared areas in your property (if you are living in an apartment building there are often so called fællesarealer). Other sites do not cover anything at all.

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Here a few tips from the Danish insurance association of what you can do to avoid problems.

TIPS when renting out your home short term

Remove your most valuable items before subletting

 

Find out as much as you can about the temporary tenants – for instance if they have a liability insurance or are otherwise covered

 

Always make a contract and make them pay a deposit

 

Find out how your insurances cover when you sublet – and if you can buy an extra one. For instance Alka Insurance proposes a special short term insurance when subletting you home at DKK 200 for four weeks

 

Make sure you understand how you are covered (or not) through the site you are using – for instance Airbnb’s host insurance coverage conditions

 

Only communicate with your short-term tenant via the communication system of the rental site – if there are any misunderstandings or problems it is important that you can document all correspondance and communication

 

Remember you are entitled to say NO, you are not obliged to let someone into your home whom you do not feel comfortable about

 

If you are already renting the apartment or house you are living in in Denmark – find out if you are entitled to sublet it by checking your contract or asking the landlord. Especially the andels-associations may have clauses concerning subletting

 

Make sure you know if you need to inform SKAT of your extra income