Holiday Let Insurance: A Complete Guide

No business is immune to risk, and holiday letting is no different. By taking out specialist holiday let insurance, you can manage that risk.

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 set you up in the right way.

What is holiday let insurance?

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 helps protect you from the risks that come with renting out your home.

Why do I need holiday let insurance?

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. Continue reading to find out more about these requirements.

What type of insurance will I need?

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 employer's liability insurance.

Let’s take a deeper look at the different types of insurance available:

Public Liability insurance for Holiday lets

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 of 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:

• Property features:

  Do you have a hot-tub, swimming pool or open fire at your property? For many holiday goers, these are some of the big attractions and they can make all the difference to your success. They also come with additional risks to your guests. You’ll need to make sure that you are covered for all associated risks with regards to any of these appliances and features. You need to check the policy wording so that you understand exactly what you are covered for.

• Stairs, pavements, and flooring:

  Does your property have unusually steep stairs, or perhaps your pathway to the front door is a tad uneven? Perhaps you’ve just put down new, shiny floors in the kitchen that could be potentially very dangerous when wet. You need to take a moment to check whether your policy covers you for accidents in these areas. Could you assist your guests by putting up ample warning signs or guidance?

• Malicious damage:

  You may want to check that your policy covers for this. 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 experience these issues, it helps to know if you are covered, should you be unlucky with your guests.

You must ensure that your insurance policy covers you in the United Kingdom. Check the small print, especially if you are a resident in a foreign country.

Note: The terms and conditions of the policy may come with restrictions that you are not aware of.

You need the help of a specialist provider to make sure you're getting the right cover for your needs, that's why we've partnered with holiday home insurance specialists Pikl, to bring you insurance that's comprehensive and designed with your needs in mind. Contact them today to get your quote.

For more information, read our full guide to public liability insurance for holiday lets.

Contents insurance for holiday lets

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:

• Guests:

  Be sure 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.

• Pets:

  There’s no doubt that the demand for pet-friendly holidays is increasing. Here at Sykes, we’ve taken away more pets than children during the last 12 months. 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.

• Individual items:

  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 to entice coffee lovers to your property, 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.

  

Cover against burglary and theft:

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.

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.

Buildings insurance for holiday lets

A building’s insurance policy covers the house’s structure, such as its walls and roof 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. You can find out more in our guide to holiday let mortgages.

Use our Holiday Rental Income Estimate Letter service to help with the application process.

Key points for buildings insurance for holiday lets:

• 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.

• Under-insuring: If you understate the cost of reconstructing your property to save money on premiums, you may end up being under insured.

• 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 unoccupancy 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 turnover of guests.

• Changes or improvements: If you make changes like adding a hot tub or extra construction, 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.

Click here for Holiday Let Insurance from Pikl.*

Holiday let insurance: further considerations

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:

Legal expenses:

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 overstaying guests and consumer and residential tax protection.

Cover can be anywhere between £50,000 to £100,000+.

Loss of income

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.

Emergency travel expenses

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.

Alternative accommodation

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.

Employers’ liability insurance

If you are employing staff such as cleaners, you need take a moment to consider whether you require employer’s liability insurance.

How can you secure the best holiday let insurance policy for your property?

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.

What is the cost of a holiday let insurance policy?

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.

Key points:

• How much it would cost to re-build your property. The higher the cost of re-building, the higher the premium. Remember, if you understate the cost of reconstructing your property to save money on premiums, you may end up being under insured.

• The level of public liability insurance you choose. For example, if you choose up to £2m, it will be a cheaper policy than having up to £5m in public liability. Some insurers will offer up to and over £10m, yet some insurers will include this as a standard. It will depend on your needs and you should discuss this with the provider that you are considering.

Read more about costs with our guide to guide to costs of running a holiday let.

Is holiday let insurance tax deductible?

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.

You can read more about tax and holiday letting in our tax guide for furnished holiday lets.

Summary

So whether you’re 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.

*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.