Renting out rooms on websites like Airbnb can be great little side earners, but ask yourself this question – have you told your insurance company?

A Coromandel homeowner is warning others who rent out rooms or properties via short-term rental accommodation websites to make sure their insurance covers them if the worst eventuates.

The Coroglen local, who's asked not to be named, had previously listed a sleepout located on her property on popular website Airbnb, but had not informed her insurance company.

Then the worst eventuated.

When the weather-bomb struck the Coromandel earlier in March about a metre of water swept through the sleepout, causing extensive damage to the building and destroying everything inside – the sofa, television, bed, and more.

But two years ago she'd taken out house and content insurance with one New Zealand's largest insurers. Everything would be okay, so she thought.

'When we first took out insurance it was just a sleepout for our own private use, then about a year ago we thought we could make some money out of it and do some B&B which I know a lot of people are doing in Whitianga, particularly with Airbnb and other sites.

'It didn't even occur to us to let the insurance company know.”

Following the flooding, she called her insurer to register her claim, and during the call the company's service agent asked if they ran a B&B or rented any rooms from the property.

So she told them, 'Yes, we did”.

'Later they called me back saying they were unsure if they could cover us because we didn't inform them we were using it [the sleepout] for business purposes.”

Several days later an insurance assessor visited the property to check the damage. During the visit the assessor intimated the homeowner's content claim for the sleepout would likely be turned down due to her non-disclosure.

Then three days later, the insurance company notified her of their decision.

'They turned down the entire claim for the structural repairs and content because we hadn't informed them we'd rented out the sleepout, which apparently increases the risk.

'I asked them why it increased the risk, just because it was rented out that didn't increase the risk of flood or natural disasters, they're not exactly man-made.

'They just said that's the policy, that's what the underwriters have decided.”

While disappointed, and a wee bit miffed, the homeowner accepts she should have notified her insurance company that she was renting out the sleepout being as a B&B.

But she hopes her experience will serve as a warning to others.

'Many people move out of their houses over Christmas and New Year's, lock up their personal items and rent out the property. You just think gosh, what if there was a fire, they lose everything and the insurance company declines their claim because they did B&B and weren't covered.

'A lot of people said I should fight it, but honestly, I just want to fix the sleepout and move on. I also don't want to end up with a black mark on my insurance rating either, nobody wants that.”