While some areas of insurance fall into either a domestic or a commercial category, others are not quite so clear cut.
Commercial and personal insurance broker Gareth Evans handles bed & breakfast insurance at Whangarei-based brokerage Adams Trimmer, a field which walks the line between being domestic and commercial in nature. According to Evans, dealing with these ‘grey areas’ throws up a variety of unique challenges, especially if the field is rapidly evolving, and tailoring insurance schemes and adapting to rapid sector changes becomes vital in ensuring that clients have the correct cover in place.
“We recognised early on that B&B fell between the two categories of domestic and commercial insurance,” Evans told Insurance Business. “We developed a scheme to recognise that it’s an owner-occupied house that also functions as a business, and we made sure that the insurance was of a domestic nature that also has commercial aspects to it.”
“What’s really interesting though is that the definition of a B&B has evolved quite dramatically in recent times,” he explained. “We traditionally looked at the B&B from its established view - a mum and dad owning a house, and then opening it up to other people to stay in. But with the introduction of Airbnb, that meaning has been slightly lost. Now, people are letting out whole houses for short-term rentals, which is outside of the traditional B&B definition.
“One of the key challenges becomes trying to recognise these changes and adapt accordingly, trying to understand each individual’s interpretation of B&B and then structuring their insurance around that.”
Evans says that when it comes to owner-occupiers renting out rooms, the insurance cover is primarily domestic with minor elements of commercial – however, when they’re purely operating as a business, the cover moves firmly on to the commercial side. It therefore becomes increasingly important to understand the specifics of each operation, along with the risks each business faces.
“Each individual case is very different,” Evans explained. “If you have a separated granny flat that’s used purely as a commercial building, for example, that falls outside the domestic scheme and has to be treated as its own commercial enterprise.
“When it comes to Airbnb, it has totally revitalised what that terminology means, and our job is to make sure that people are aware of the ins and outs of that,” he added. “We come across people that don’t think about insurance because Airbnb makes it so easy to put your house on to the market, and they’re the people we can really assist.”