We explain everything you need to know about holiday home insurance, including what it is, what it covers and whether you need it.
What is holiday home insurance?
As the name suggests, holiday home insurance protects a property that’s not your main residence. Rather, it’s a holiday house that you use for your own breaks or you rent out to friends or paying guests.
Essentially, ‘holiday home’ status means you also have a main address as your permanent residence, which can’t be your holiday home. .
Certain rules apply for a property to qualify as a furnished holiday let. Under HMRC rules, it must be available for letting as a furnished holiday accommodation for at least 210 days in the year.
Do I need holiday home insurance?
It might not be compulsory to have holiday home or holiday letting insurance but in most cases holiday homeowners do buy it.
However, if you’re still paying a mortgage on your holiday home, your lender might insist you have buildings insurance to cover the cost of any structural damage to your property.
Contents insurance, which covers your belongings at your holiday home, is more optional.
You’re less likely to keep expensive jewellery or other high-value items at your holiday home. And it’s likely that the furnishings and equipment might not be the same spec as what you have at your main home.
But if you want peace of mind that your items are covered from theft or damage, contents insurance could be a good option.
Whatever level of cover you opt for, it’s important to recognise that holiday home insurance is different from standard home insurance.
This is because your holiday home is used differently.
It could well be left vacant for large parts of the year, especially out of season, which makes it more susceptible to burglary or vandalism.
Also, if there’s a leak or a local flood, because nobody’s living there at the time, it might go unreported. The damage could be much worse too because it’s not dealt with promptly.
Holiday home insurance also takes into account other people who stay at the property.
This includes guests who could injure themselves while staying there or who might damage the property either by accident or through neglect.
What’s covered by holiday home insurance?
Your holiday house insurance policy should typically cover you for a number of situations that might not apply with a standard policy for your main residence.
This could include:
- Cover for a holiday home that’s empty for more than 30 consecutive days
- Cover for friends and family as well as paying guests
- Public liability cover in the event that you let out your holiday home
As the person letting out a holiday home, public liability insurance ensures that you’re protected from legal expenses. This could come in handy if someone were to injure themselves while staying at your holiday home and then take legal action against you.
It also covers compensation claims if a guest were to suffer injury, death, disease or illness during their stay.
You could be held liable if it’s proved you were negligent.
For example, if an injury occurred because you didn’t take action to fit a handrail, ensure the carpet on the stairs was properly fixed down, or to fix a faulty electric fitting. It might prove expensive if a guest claims negligence on your part and you have no public liability insurance in place.
It might pay to do a risk assessment at your holiday home.
If you’re going to provide equipment for activities or leisure such as trampolines, bicycles, pools and hot tubs, ensure they’re regularly maintained.
This way, if there is an accident or injury it’s less likely to be down to neglect on your part.
What isn’t covered by holiday home insurance?
All insurance policies vary so it’s well worth taking the time to read through the details so you know both what’s included and what might be left out.
With holiday home insurance the following things might not be covered:
- Personal belongings (yours and your guests): Expensive personal belongings, such as a watch or jewellery, are unlikely to be covered so you could consider supplying a safe in your holiday home.
- Accidental or malicious cover: Accidents happen, especially with paying guests. From red wine spilled on expensive sofas to broken lamps, you may need to pay extra for this if it’s not included in your policy.
- Unlimited time away from your holiday home: There is usually a limit on the number of days a property can be left for, for example 60.
- Home emergency cover: Most policies don’t automatically include home emergency cover, which can be added for an extra cost. A home emergency policy should cover you for the cost of paying for emergency repairs such as if you have a water leak.
- Alternative accommodation: If something happens, like a flood or a fire, make sure your policy covers the cost of alternative accommodation for paying guests.
- Employers’ liability: If you hire anyone to work at your holiday home, such as a cleaner or gardener, this cover would protect any costs associated with them. For example, if they injure themselves and bring legal costs against you, this may not be included on a standard holiday home policy.
- Overseas properties: You can buy a policy that covers holiday homes abroad but this may cost extra. Alternatively you might need to buy a specialist policy as it usually doesn't come as standard.
- Listed buildings: While most properties should be covered by holiday home insurance, if you have a listed building you may need to buy a specialist policy.
- Loss of rental income: It’s possible to buy a policy which protects you if you lose rental income because something has happened to your holiday home. Usually, this is an add on and not a standard feature of holiday home insurance.
There might be policies that offer these exclusions, so keep an eye out for them.
Extra cover for holiday homes
You might want to consider optional extras to your holiday home insurance.
- Cover for accidental damage
- Cover for cash and credit cards left in the premises
- Insurance for bicycles kept at the property
- Key cover
When it comes to keys and locks, have a think about how secure your holiday home is – given that it might be left unoccupied for long periods.
In some cases, if you don’t have adequate - or approved - locks on your holiday home, you might struggle to get cover at a reasonable price. You may be able to lower the cost if you have a security system installed.
How do I make my house a holiday home?
To qualify as a furnished holiday let under HMRC rules, your property must be available for letting for at least 210 days in the year.
In certain popular tourist areas, for instance Cornwall and The Cotswolds, there are also usage restrictions that limit or prevent holiday lettings.
In St Ives, Cornwall, for example new build residential properties can only be bought for ‘full residential use’.
This means if you buy a property in the area, you must live in it full time and can’t let it out to holiday makers.
Another potential stumbling block could lie in the terms of your property lease.
Some leases, and the occasional freehold deed, contain a small but highly significant clause that says something along the lines of:“Only to be used as a private residence; and not to be used for business purposes”.
This might effectively put a stop to any holiday letting plans.
Buying and letting out your holiday home could be a fantastic – and profitable idea – but make sure you do a bit of homework first.
Will a standard home insurance policy cover my holiday home?
Standard home insurance works in a similar way to holiday home insurance but it’s important to remember these are two different policies.
A standard home insurance policy is unlikely to cover you for paying guests or for leaving a property unoccupied for more than 30 days, for example.
The risks are different for holiday homes and that is why you may need a separate policy if you want to make sure you have the correct cover.
If you buy a standard home insurance policy for your holiday home, you may not be able to use it if something does happen and you need to make a claim.
How much is holiday home insurance?
The cost of holiday house insurance depends on lots of different factors including the size of the property, where it’s located, and how often it’s occupied. There are lots of ways to cut down the cost of a policy including the following:
- Pay annually instead of monthly: If you pay for insurance monthly, you’ll also have to pay interest so it’s always cheaper to pay in one go for a year if you can.
- Compare prices and insurers: Never go with the first quote you’re given and always shop around when looking for a new policy.
- Using one insurer, for both buildings and contents policies, can sometimes be cheaper than buying separate policies from different insurers.
- Pay a higher excess: If you choose to pay a bigger excess, this can lower your monthly premiums, although always make sure it’s still affordable if you do need to make a claim.
- Discounts for multiple properties: If you own more than one holiday home, you may be able to get a discount if you use the same insurer to cover all of them.