Building and Contents Insurance for Holiday Lets

Having the right level of building and contents insurance for holiday lets is essential. What would you do if your property was to suffer a devastating fire caused accidentally by one of your guests? Or if your property is burgled during a vacant period, resulting in the loss of all of your belongings? It’s not nice to think about, but it could happen.

Failure to protect yourself against unforeseen circumstances can lead to huge financial losses, immense stress and even bankruptcy. That’s where building and contents insurance for holiday lets can help.

In this post we’ll take a look at what buildings and contents insurance can do to give you peace of mind. We’ll look at what is and isn’t covered, as well as advice on applications and claims.

What is Buildings and Contents Insurance for holiday lets?

In a nutshell, a buildings insurance policy covers the house’s structure, such as its roof, walls and its permanent fixtures and fittings, such as kitchens, swimming pools and bathrooms.

Contents 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.

Buildings Insurance for holiday lets

Having a buildings insurance policy will cover you for the cost of repairing damage to your home’s structure. This includes damage to its structural features such as the walls and roof, as well as its permanent fixtures and fittings such as the kitchens and bathrooms.

The insurance can also cover external structures such as fences, sheds, and garages, as well as pipes, cables, and drains. In the event that you lose your entire property to something like a fire, you’ll need cover for the cost of rebuilding the whole property.

This is called a ‘Sum Insured’ policy and it’s the most common type of insurance policy for holiday let owners.

When you apply for your insurance policy, you’ll need to make sure that you provide an accurate quote for rebuilding your entire property from scratch, this is the sum that forms the basis of your quote.

Getting an accurate re-building quote

It’s important to understand that the cost of rebuilding your property is not the same as the cost of your house. The two sums will differ greatly and if you provide an inaccurate quote then you could find yourself drastically under insured.

You may be tempted to provide a low estimate in order to keep your policy cost low, but this is a huge risk. If the worst should happen then you could end up paying out a fortune to rebuild the property because the insurance company will only pay out up to amount that you stated. It’s imperative that you get it right.

The building insurance will cover the entire cost of rebuilding the property including:

• The cost of demolition

• Site clearance costs

• Architect fees

• Materials

• Labour

You need to make sure that you have received a re-building quote from an accredited professional. The sum insured cover can be confusing to calculate, but it allows you to pay only for what you need.

There’s an online calculator on the Association of British Insurers’ website that can help you work out how much it will cost to rebuild your home. When you apply for a quote from a provider, they will not accept approximate figures.

This needs to be an exact figure, and for your own peace of mind it should be one that you have received from a chartered surveyor.

Note: The cost of rebuilding your property will increase over the years, so it might be best to choose an index-linked policy.

What is an index-linked policy?

Index linking is used in a variety of property insurance policies, including homeowners’ and contents policies, to ensure that the amounts insured are in line with current market values. An index-linked policy means that if the rebuild cost changes (for instance, the cost of bricks increases), the insured amount will also adjust automatically.

What does bedroom-insured mean and why is it not recommended for holiday lets?

Some insurers will offer bedroom-rated cover which uses the number of bedrooms in the property to calculate the cost of rebuilding. It’s much more straightforward because you don’t have to worry about calculating the rebuild costs and it protects you from being under-insured.

But the downside is that it usually produces a very high figure for the sum-insured and you could easily end up paying for cover that is not required. Having an accurate quote from a chartered surveyor is the best way to make sure you get a policy that accurately meets your needs.

You need specialist insurance for holiday lets, your regular home insurance is not adequate, so make sure you choose a provider that is a specialist in holiday let insurance.

What is excluded from buildings insurance for holiday lets?

Although buildings insurance for holiday lets can be very comprehensive, there are some common exclusions that are often not included by many insurance providers. You need to be aware that you may not be covered for the following:

• Gates, fences, and plants damaged by storms

• Damage to outside pipes caused by frost

• Neglecting your property or bad workmanship that lead to damage

• Damage caused to brickwork by insects, birds, and other pests

• And general wear and tear

If you are experiencing any of these issues, then you may want to have a discussion with your insurance provider about how this might affect your claims and if you are covered for these.

How to prepare for your insurance quote

Applying for your insurance quote can be quite a long and detailed process. To make it easier for you, we’ve made a checklist that you can go through to make sure you have everything you need before you begin:

Buildings Insurance quote top 10 checklist:

1. Decide if you need both buildings insurance and contents insurance or just buildings insurance. You can choose to take them both independently or together.

2. Do you have your accurate re-build value ready? They will not accept blanket numbers such as £550,000, it needs to be specific.

3. Do you know the construction type of your walls? You will be asked this question, so make sure you have it to hand.

4. Can you specify what your roof covering is made of? Slate, concrete or aluminium? You’ll need to know this information.

5. What is your property type?

6. Do you know what percentage of flat roof your property has? You may be asked this question.

7. Have you thought about how much excess you’d be prepared to pay?

8. Do you want to add extras such as legal cover or accidental damage? You’ll be asked during the application process.

9. What date do you need the cover to start?

10. What date was your property constructed?

If you don’t have the answers to these questions yet, you may want to take a moment to do some research before you approach a provider for a quote.

Click here for Holiday Let Insurance from Pikl.*

Other considerations

External structures: 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 to them.

If the property that you are insuring is an external structure, for example a garden annex or a converted shepherds hut, then you may need to search for a more specialist provider. These types of structures are often built from materials such as timber, and for this reason many insurers won’t cover it.

Winter warranties: If you can’t visit your property often enough to comply with the minimum occupancy terms, or you don’t have enough bookings, then the property could be lying empty.

Check to see if your insurer has in-occupancy restrictions over the winter. Frozen pipes are not always included either, so if your property is likely to be vacant over the winter months, then you will need to specify this information with your insurer.

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 turnover of guests.

Changes or improvements: It’s natural for you to want to expand and improve your property for your guests, but you should be aware that even minor changes can have a significant effect on your policy. Failure to tell your provider of new additions such as hot tubs could leave you exposed to huge risk. Don’t wait until renewal dates to tell your insurer. Although you may see your premium rise, you won’t be covered if anything happens in the interim.

Contents insurance for holiday lets

Owning and running a holiday business is an exciting and rewarding experience, but as with any other business venture, it doesn’t come without it’s difficulties along the way.

The last thing you want is for a guest to cause damage to your beautifully furnished holiday let, especially when you’ve put so much time, money and effort into equipping and furnishing it. Protecting yourself against theft and damage is a necessary part of the holiday letting process.

Note: When selecting your insurance, make sure that you check that the contents insurance includes commercial letting. It may seem like an obvious point, but not all holiday homes are rented out to paying guests.

Remember that holiday let insurance is different from your regular house insurance. You may find that you are not covered for certain items because the risk of theft or damage might be higher.

Contents insurance for holiday lets covers a wide range of things such as:

• Damage and theft of kitchen and household appliances

• Damage to furniture such as tables, beds and sofas

• Soft furnishings such as carpets and upholstery

• Theft and damage to valuables such as vases and paintings

• Damage caused by pets

How is contents insurance worked out?

The best way to make sure that you are fully covered for your contents is to make accurate calculations on how much it would cost for you to replace each of the items in the property. You can then total this amount and use this as the basis for your insurance policy.

Top questions about contents insurance for holiday lets:

Are my valuables or guest’s possessions covered?

It’s not a good idea to leave anything of great value in your holiday home. Even though most guests are careful and respectful, it’s not always the case. Remove any valuables from the property before you receive guests. If a guest damages or loses their own possessions in the property, you are not liable for this.

What if a guest leaves something behind or takes something from the property?

Check-out day can be quite a frantic time for guests as they try to gather their luggage and vacate the property. It’s a very common occurrence for guests to leave their belongings behind by accident, or even to pack something that they did not realise was the property of the holiday let.

If a guest leaves their items behind, then they usually won’t be covered at all under an insurance policy. You’ll need to check with your insurer if you are covered for guests removing items from the home, but generally this won’t be covered either.

What about breakdown of household appliances?

Many holiday let owners choose to purchase items for their holiday let to entice new guests, such as coffee machines and even gym equipment. It can be a great way to attract more business, but it could also cause issues if the item breaks down.

Insurers don’t usually cover the cost of fixing appliances that have broken down, so if you are thinking of including these items in your holiday let, you need to be prepared to fix them yourself if they break.

Full replacement of broken down items is usually covered by the manufacturer under a warranty, instead of contents insurance, even if it is a guest who has broken the item.

Can I get cover for single items?

You might be able to get cover for a single item, but it is more likely that you will need to submit a full valuation for the whole of your contents rather than individual items.

You’ll need to make sure that your insurance provider will cover for these types of items and make sure that they are listed on the inventory, along with an accurate valuation of the cost of replacement.

What if my holiday let is burgled?

You can get cover for theft for items in your holiday home, however this will depend on circumstances such as whether the items were stolen by an intruder or by a guest.

Accidental damage

When one of your guests experiences a one-off incident that unintentionally causes damage to your property, this is classed as ‘accidental damage’ under insurance policies.

It can range from scratching a kitchen surface to putting a football through a window. Cover for accidental damage is usually purchased as an add-on, and is rarely included under a standard policy.

It will increase the cost of your policy, but could save you a great deal of money and stress in the long run if one of your guests was to have an accident in your property.

What happens if one of my guests is injured from an accident in my property?

If someone has an accident in your property and damages it’s contents then you could be covered under ‘accidental damage’ but if that guest also injured themselves in the accident then you will need Public Liability Insurance to cover you against any claims that they might make against you. You can read more about this in our Full Guide to Public Liability Insurance.

Summary

Getting to grips with holiday let insurance can be very daunting to begin with. With so much to think about, it can be tempting to head for the easiest option or the cheapest deal. We hope that this information will help guide you towards the best insurance deal for your property.

If you’ve got a property that you’re thinking of letting out, then you can download our free owners pack today to find out more.

Disclaimer

The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA. As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.

*Sykes Cottages Ltd is an Introducer Appointed Representative of Pikl Insurance Service Limited Registered Number 10449346 who are authorised and regulated by the Financial Conduct Authority firm number 773457. Registered Office: Suite B, 2nd Floor, The Atrium, St Georges Street, Norwich, England, NR3 1AB