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Buying a holiday let property is an exciting investment but, as a new property owner, as well as thinking about colour palettes and interior styling, it is also essential that you are up to speed with all of the necessary holiday let requirements regarding Holiday Home Insurance …
While it’s not a legal requirement to take out Holiday Home Insurance, no business is averse to risk, and holiday letting is no different. By taking out specialist holiday home insurance, you can effectively manage that risk if something were to go wrong, such as a fire, flood or break-in.
For example, if your pipes burst over the winter months or your guest suffers a serious accident, it’s your responsibility. Having the right holiday home insurance policy will give you protection against unforeseen circumstances. Without it, you could suffer substantial financial loss and even risk losing your business altogether.
Holiday Home Insurance is different from residential home insurance. If you stay in the property for less than 120 days per year, it’s considered as a second home and you’ll need specific holiday home insurance if you plan on renting out your second home to paying guests. Holiday home insurance is specialist insurance that protects you from the risks that are associated with renting out your home.
Quite simply, you’d be taking a big risk if you don’t take out specific insurance. Without specific Holiday Home Insurance, you’re vulnerable to costs associated with any unfortunate events that may occur at your property. If you don’t have the adequate cover you could end up having to pay out substantial sums of money.
Do you have a hot-tub, swimming pool or open fire at your property?
For many holiday guests, these prove attractive and can make all the difference to the success of your holiday home. However, they also come with additional risks too. You’ll need to make sure that you are covered for all associated risks with regards to any of these appliances and features.
Check the policy wording carefully so that you understand exactly what is covered.
There are various types of holiday home insurances available due to the numerous factors involved.
Building and contents insurance are the two primary types of insurance for holiday homes, as well as public liability insurance. Insurance companies will include these as part of a comprehensive policy with many things covered as standard. There are also additional products that you can add such as legal cover and employers liability insurance for an additional sum.
Public liability insurance for holiday homes
Although public liability insurance is not compulsory, it is very highly recommended. Without it, you could find yourself paying out huge sums of money to guests who experience an accident or cause accidental damage to your property. Holiday at Home insist that Public Liability Insurance is taken out to the sum of £5mllion and is indeed a clause within our contract.
We don’t like to think about anything unfortunate taking place, however people do suffer accidents when using the stairs for example, some properties also have open fires/wood burners which can prove a hazard if the guest has never used them before. Perhaps you can think about any potential hazards that you might have in your property?
Does your property have unusually steep stairs, or perhaps the pathway to the front door is uneven? Perhaps you’ve just put down new, shiny floors in the kitchen that could be potentially be dangerous when wet. You need to take a moment to check whether your policy covers you for accidents in these instances
Could you help your guests by putting up a warning sign or guidance?
Malicious damage is broadly defined as intentional destruction or defacement of property. This includes vandalism, trespass, smashed windows, and illegal tipping. Whilst we hope that you never have to encounter these issues, it helps to know if you are covered, should you be unlucky with your guests.
Holiday homes can be vulnerable to burglars if they are frequently left empty, and guests may be complacent about ensuring all doors and windows are secure. If one of your guests leaves a door unlocked, make sure your insurance covers you for theft by unforced entry.
Some insurance policies will require certain security measures to be in place, such as having a lockable box for key collection. So make sure you check what security measures you are required to have in place as failure to do so may invalidate your insurance.
A building insurance policy covers the house’s structure, such as its walls, roof, and walls, as well as its permanent fixtures and fittings, such as kitchens, swimming pools, and bathrooms. To ensure you have the right buildings insurance, it’s crucial to understand how much it will cost to rebuild the property. This amount will be different from the current market value and it’s imperative that you get the calculation correct in order to get the correct level of cover.
To find out the cost for your property you can use the services of a chartered surveyor or speak to your mortgage company for help. You can also get guidance from the Association of British Insurers.
Note – If you are paying a mortgage on your holiday let, then your mortgage provider may insist that you take out buildings insurance. You should check you understand their requirements.
Contents insurance although optional is highly recommended. This type of insurance specifically covers items contained within your property from damage or theft. Many insurers impose a limit on how much they will cover for individual items, or the total cost of a claim.
To determine how much contents insurance you require, create an inventory of all your items and their estimated values. Not only will this give you a good idea of how much your possessions in the property are worth and how much contents insurance you require, but it may also be useful if you ever need to make a claim.
Ensure you check that your contents insurance covers against paying guests, and not just by family members. This seems like an obvious point, but some insurers only cover for second-holiday homes, and not for commercial letting.
There’s no doubt that the demand for pet-friendly holidays is ever increasing. If your property accepts pets, then you’ll want to be sure that your contents insurance will also cover any damage caused by your furry guests.
Some individual items are only insured up to a certain amount, and the breakdown of appliances may not be covered. Let’s say you’ve invested in a fantastic new coffee machine and within the first week of the high season, a guest damages or breaks it. You’ll want to make sure you can easily replace these items at no extra cost if they get damaged. Or at least be prepared to pay to replace them if they are not covered.
Some key points for buildings insurance for holiday lets
Make sure that you factor in structures such as garages, outbuildings and sheds in your policy. If you fail to mention them, you won’t be covered if anything happens.
If you understate the cost of reconstructing your property to save money on premiums, you may end up being underinsured.
If you can’t visit your property often enough to comply with the minimum occupancy terms, or you have insufficient bookings, then the property could be lying empty. Check to see if your insurer has any inoccupancy restrictions over the winter.
General wear and tear
This is generally not covered by Insurers and you need to be aware of this due to holiday lets often suffering wear and tear from the regular turnover of guests.
Changes or improvements
If you make changes like adding a hot tub or extra construction, don’t wait until your renewal date to advise your insurer. Although you may see your premium rise, you won’t be covered should anything happen in the interim.
As mentioned above, all policies are different. However, there are some common exclusions to holiday let insurance that you should check with your policy provider. Many providers also offer add-ons that are not included as standard but can be included for an extra charge.
You might want to consider the following areas:
Loss of pre-booked rental income can be covered by some insurers. There are occasions when the property may not be habitable for guests, and you may lose the bookings that were due to go in or be forced to cancel all of your upcoming bookings. In this event, you’ll want to make sure that you are covered for any loss of income. This can generally be anywhere from £25,000 to £100,000 or more, and it will depend on what your policy is willing to cover and how much premium you pay.
If you live abroad but are required to travel back to oversee any issues, you may be able to get travel expenses paid. If you live outside the UK, this can be a very important part of your policy. It’s worth checking this out if you manage your holiday home remotely.
We don’t like to think about pipes bursting whilst a guest is in the property, but if something like this occurs you will need to check if your insurance will cover the cost incurred to move the guest to alternative accommodation.
If you are employing staff such as cleaners, you need take a moment to consider whether you require employer’s liability insurance.
Holiday at Home highly recommend Boshers who specialise in all aspects of holiday home insurance. Please click on the highlighted link to be take directly to their website and mention that we have recommended you.
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Making the decision to let your holiday home can be daunting but rest assured we’re close by with guidance, ideas, and suggestions along the way ensuring you’ll always remain on track.
Holiday at Home is the booking agent for a unique collection of luxury holiday properties. If you are considering becoming a new holiday home owner or need any assistance, then please do not hesitate to contact our friendly team.