Holiday let insurance premiums can vary greatly, and for many holiday let property owners, finding the right level of...
No business is averse to risk, and the business of holiday letting is no different. By taking out specialist holiday let insurance, you can manage that risk.
For example, if your pipes burst over winter or your guest suffers a serious accident, it’s your responsibility. Having the right holiday let insurance policy will give you protection against any unforeseen circumstances. Without it, you could end up paying out a fortune and could even risk losing your business altogether.
We’ve gathered our 30 years of knowledge on holiday let insurance here for you in one place; continue reading to find out how the right insurance policy will give you much-needed peace of mind.
To begin with, holiday let insurance is different from regular home insurance. If you only stay in the property for less than 120 days per year, it’s considered a second home and you’ll need specific holiday let insurance if you plan on renting out your second home to paying guests.
Holiday let insurance is a specialist insurance that protects you from the risks that come with renting out your home.
Quite simply, you’d be taking a big risk if you don’t take out insurance. Whilst holiday let insurance is not required by law, without it you’re vulnerable to costs associated with any unfortunate events. If you don’t cover yourself properly, you could end up having to pay very large sums of money, which can cause a lot of stress and hassle.
If you’re considering using a holiday let agency to manage your holiday let business then you may be required to have insurance as part of the contract. Some holiday let agencies specify a minimum amount of cover for things such as pubic liability. Continue reading to find out more about these requirements.
Finding the correct insurance for your needs can be a difficult task. There are various types of insurances available due to the numerous factors involved.
Building and contents insurance are the two primary types of insurance for holiday rentals, but you’ll also need to consider public liability insurance too. Most 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 purchase, such as legal cover and employers liability insurance.
Let’s take a deeper look at the different types of insurance available:
Although public liability insurance is not compulsory, it is 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.
In fact, if you let your property through an agency, they may require you to have this as part of your contract. Here at Sykes, we require all our property owners to have a minimum of £2m public liability insurance.
We don’t like to think about it happening, but people do suffer accidents whilst going up and down stairs, and some property features such as fires can be a danger if the guest has never used them before. Have you thought about any potential hazards in your property?
Here are some key points you might want to consider:
Note: The terms and conditions of the policy may come with restrictions that you are not aware of.
Contents insurance is also optional, but 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.
Here are some other things you might want to consider:
Holiday rentals are vulnerable to burglars because 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. Be sure to check what security measures you are required to have in place. Failure to do so may invalidate your insurance.
View our guide on securing your home for tips on how to keep your home safe from intruders.
Note: Holiday visitors can sometimes be dishonest and steal items from your property. It’s unlikely, but if you have valuable items in your home, you’ll want to make sure you’re protected against theft by paying guests as well as intruders.
A building’s 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 what it will cost to rebuild your holiday home. This amount will be different from the current market value and it’s imperative that you get the calculation correct to get the right amount 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 still paying the mortgage on your holiday let, then your mortgage provider may insist that you take out buildings insurance and you should take a moment to check this with your mortgage provider and find out their requirements.
Key points for buildings insurance for holiday lets:
As mentioned above, all policies are different. There are, however, some common exclusions to holiday let insurance that you should check with your policy provider. Many providers also offer add-ons that aren’t included as standard, but can be added for an extra charge.
You might want to consider the following areas:
This isn’t always included as standard. This covers legal fees, compensation and appeal costs incurred because of a wide range of legal disputes in which you may become involved as a holiday homeowner.
You may want to consider making sure you are covered for property infringement, eviction of over staying guests and consumer and residential tax protection.
Cover can be anywhere between £50,000 to £100,000+.
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 let remotely. You can read more about managing your property remotely here.
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.
Here are our top tips to secure the best policy for your holiday let:
Ask questions: As mentioned above, you need to take the time to read through your policy and ask questions if you are unsure of anything. Make some phone calls, have a web chat or send an e-mail to find out about any information that you are unsure about. It’s best know where you stand instead of making assumptions.
Provide accurate information: By providing accurate information, you are more likely to receive an accurate quote. It’s that’s simple. When a provider has more accurate information from you, they can provide you with a policy that really suits your needs. It’ll also make the claims process much easier for both you and your insurer if all your valuations are correct.
By asking around: Don’t go with the first quote you get. Getting multiple quotes and speaking to a few providers, you’ll get a good understanding of what can be provided within your budget and to cover your needs.
Read reviews: Customer reviews are a great way to find out about things such as customer care and support as well as the ease of the claims process. These factors will all tie in with finding the right policy for you
Holiday letting can be quite costly to set up, and it’s tempting to keep costs low by taking out the cheapest insurance. But if something does go wrong and it turns out that you’re not covered for something, you’re likely to regret it.
Usually, it can cost as little as £150 annually for a standard buildings and contents policy, but when you include public liability cover for commercial holiday letting, it can rise to over £500+. The price will vary depending on each individual case.
Depending on how much tax you pay, you might be able to deduct the cost of the insurance policies you take out for your holiday rental. To find out more, read our guide to tax and holiday letting here.
So whether your just at the beginning of your holiday letting journey, or ready to take the plunge and start marketing your property, remember to get your holiday let insurance to protect yourself from any of those unexpected and unfortunate circumstances.
For further information about letting your property with Sykes, you can speak to a member of our dedicated consultants or download your free owner pack today.
*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.
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