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

Planning to make a little extra money by renting out your apartment or house while you are away? Do you know which insurance will cover any damages to your home and property made by temporary tenants? Find our tips here.

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By Bente D. Knudsen

Are you 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 potential damages to your home and your property made by temporary tenants.

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, three percent of the Danes rent out their property, 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.

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/sublet.

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 if your insurance company will 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/sublet 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.

Take note that  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 these are the so called fællesarealer).

Other sites do not cover anything at all.

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TIPS when renting out/subletting your home short term

Remove your most valuable items before subletting

Be curious and 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 as in the agreements between SKAT and AirBnB, since 2020 it has been mandatory for them to notify SKAT of the income generated when renting out.