Wednesday, November 29, 2023

Return to listings

Managing Risks Associated with Short-Term Rentals in Strata Complexes

Up until the early 2000s, short-term lodging options were predominantly provided by hotel chains and commercial providers. However, the landscape has undergone a significant shift in recent years, with platforms like Airbnb, Stayz, AirKeeper, Made Comfy, and Hometime reshaping the industry. These platforms empower individuals to directly rent out their properties to consumers, offering a lucrative avenue for additional income. Yet, the venture of leasing strata properties for short-term stays brings unique risks for both lot owners and strata managers. This article explores the key exposures and offers practical insights to effectively address and minimize these challenges.

There is a range of risks associated with short-term rentals within strata properties. The main risks include:

LIABILITY – With an increase in foot traffic within strata properties, the chances of accidents or injuries rise, along with the potential for damage to personal property in common areas, leading to subsequent liability claims.

PROPERTY DAMAGE – The wear and tear induced by short-term tenants may add to the financial burden of maintaining the building, covering common amenities, and addressing utility bills for shared property. Accordingly, this can lead to a rise in strata fees.

SECURITY –  guests coming and going from strata buildings means anyone can gain access to the complex. Keys that are left in drop boxes can be copied and there is a higher risk of theft and/or vandalism.

MALICIOUS DAMAGE, THEFT, & VANDALISM – a standard home and contents policy will not cover malicious damage caused by short-term renters. This applies to the unit being rented out and any common areas within the strata complex. 

Despite the risks, a little forward planning by lot owners and strata managers can significantly minimise these exposures. 

LOT OWNERS: How to reduce your risk and limit damage

Inform your broker. Short-term rental accommodation is classified as a commercial activity, so a residential insurance policy will not always be sufficient. Therefore, it is always best to check with your broker to ensure your insurance policy is tailored to your short-term rental requirements. This could include home building insurance, home contents insurance, and general liability insurance.

Consider installing security cameras in common areas and near key drop areas. If your property is overseen by a strata manager, you can speak to them about this. Be sure to change dropbox codes regularly. 

Remove all valuable and sentimental items from your property when guests are present.

Request the payment of a bond prior to guests’ arrival and return the bond after everything has been checked following their departure. 


Inform your broker about any short-term letting within the complex to confirm the appropriate insurance policies are in place. 

Maintain contact with lot owners who are renting out their units to make sure all legislative requirements are being followed by owners and guests. 

Ensure common areas are always well-maintained. This requirement forms part of the terms and conditions of the policy. Failure to do this could impact the insurer’s ability to respond to claims.

With you all the way

To discover how Honan can assist in limiting your risks during short-term rentals, feel free to reach out at any time.

Sharna Hoogenboezem
Client Executive

Honan Insurance Group Pty Ltd (Honan) (Australian Financial Services Licence no. 246749, ABN 67 005 372 396) is an insurance broker acting as agent for insureds and intending insureds. Honan is not an insurer.  The information in these articles are current as at the date of first publication and have been prepared without taking into account your objectives, financial situation or needs. Any advice provided in these articles is of a general nature only. Any statements concerning tax, accounting or legal matters are based solely on Honan’s experience as an insurance broker and are not to be relied upon as accounting, tax or legal advice. Before making a decision to purchase an insurance policy, please read the relevant Product Disclosure Statement to make sure the policy is right for you.  Insurance cover is subject to policy terms and conditions including policy limits and exclusions.

Return to listings


Honan Insurance Group Pty Ltd is now fully owned by Marsh Pty Ltd. To find out more, speak to your broker or read the announcement