Holiday home insurance
Lots of us dream of owning a holiday home to use ourselves and rent out the rest of the time to bring in some extra income – but with the pleasures come a whole host of responsibilities – from keeping on top of maintenance and paying taxes on rental income to organising adequate insurance.
If you decide to rent out your second home, standard home insurance policies do not cover you – and the insurer is unlikely to pay out for a claim if they discover you rent it out. Many standard home insurance providers do not offer specific cover for holiday homes, so finding the right insurance can sometimes prove tricky.
The risk for insurers
Holiday homes pose a greater risk for insurers for several reasons. Often owners don't make frequent maintenance checks, leading to serious problems. Holiday homes generally stand empty for long periods of the year, making them easy picking for thieves. Even if you don't rent out your property, the majority of standard household policies exclude properties that stand empty for more than 30 consecutive days, so you will still need a specialist holiday home policy. And, if you do accept paying holiday guests, they may not show the property the same respect as you would – potentially leaving fixtures and fittings damaged, leading to an insurance claim.
Be aware as well that many insurance policies stipulate in their small print that you must have approved window and door locks fitted – otherwise they could refuse to cover you if you're burgled.
Types of cover
Always tell the provider that the property is a holiday home to make sure you are taking out the right insurance.
You need both buildings insurance and contents insurance for your holiday home, just as you do for your main home. Buildings insurance protects the 'bricks and mortar' of the structure against floods, subsidence, and so on – and should cover outbuildings or swimming pools as well, based on the cost to rebuild the entire property. Contents insurance covers items within the holiday home that are not fixed in place – such as TVs, sofas and beds.
If you let out your second home you need accidental damage as an extra to protect your possessions when guests are staying. You also need public liability insurance just in case a guest tries to sue you when something goes awry. This covers legal costs if a guest suffers an injury or dies on or near your property.
If you hire staff such as cooks, cleaners or gardeners for to your holiday let, you will also need to look into employers’ liability insurance – try to find a policy offering an indemnity limit of at least £3 million.
Other add-ons include cover for loss of rent (for example in the aftermath of a flood or fire), and legal expenses cover, which pays legal fees up to a limit in the event of you having any disputes with holiday tenants.