If you own a holiday home, the first thing to say is - lucky you. But your holiday bolthole isn’t all fun and games, it is also a serious responsibility. You have to maintain it, repair it, pay taxes on it – and insure it. Just like you do with your main residence. And if you rent it out on a commercial basis, you will have to buy extra cover to protect you from troublesome guests, who could lead to damage or disputes.
Finding insurance for a second home isn’t as easy as you think. You can’t just ring up whoever insures your main residence and ask them to extend cover to your second property, as you would if you bought a second car. Most will refuse to cover you. And what you really mustn’t do is buy a standard household insurance policy without telling the insurer that you want to cover a holiday home, because the insurer is likely to refuse to pay any claims once it finds out the truth.
Insurance companies view holiday homes as a bigger risk, because they are typically left empty for lengthy periods, which makes them easy prey for thieves and squatters. Another worry is that the owner isn’t present to check up on any weather-related damage, so if roof slates are blown off in a storm, or a frozen pipe bursts in winter, the damage has time to worsen before you find out something is wrong.
And if you let your property out to paying guests, there is a fair chance that some of your tenants will return it damaged. Most standard household insurance policies exclude properties that are left empty for more than 30 days at a stretch. So what you need is a specialist holiday home policy that covers occasional use, and possibly holiday letting as well.
What cover do you need?
Like standard household cover, holiday home insurance is split into two elements, buildings insurance and contents cover. The first covers the structure of your property against fire, flood, storm, burst pipes and subsidence, and should foot the bill for any repairs or rebuilding work. This should include outbuildings, gates and fences, swimming pools and so on. You don’t insure the purchase value of your property, but its rebuilding value, which you can work out using the online calculator at the website of the Association of British Insurers. Alternatively, commission a local builder to give you a rebuilding cost quote (and index-linked it to rise with inflation)
Contents insurance will cover anything in your home that isn’t nailed down, such as beds and sofas, TVs and stereos. If you’re letting it out, you should include an accidental damage add-on, to protect your belongings against guests, who may not be as careful as you are.
If letting your property, you must buy public liability insurance. We’re a litigious bunch these days, and people are increasingly willing to sue if something goes wrong (especially if it ruins a cherished holiday). This type of cover should pay the legal costs and expenses if anybody suffers injury or death on or near your property. If you’re serious about the holiday lettings business, you should also buy employers’ liability insurance to cover any staff, possibly including gardeners or cleaners (look for an indemnity limit of at least £3 million). You might also want cover for loss of rent, say, following a fire or flood at your property. Finally, you should also buy legal expenses cover, which will pay any legal fees up to, say, £50,000, in case you have any disputes with tenants.
You should also read the policy small print carefully. Most will insist you have special correct window and door locks, otherwise they may refuse to cover you for any break-ins. If you wait until you claim, it could be too late. Once you’ve got the right insurance in place, your holiday hideaway will be an even more relaxing place to be.