Holiday let insurance premiums can vary greatly, and for many holiday let property owners, finding the right level of insurance within your budget can be tricky.
With so many factors to consider, it’s hard to know where to start when setting up a holiday let business, and insurance can be a confusing subject for new owners.
Understanding more about holiday insurance premiums can not only give you peace of mind, but can also save you money by making sure you are only paying for things that you really need.
To give you a helping hand, we’ve combined our 30 years of holiday letting know-how to answer your top questions on holiday let insurance costs.
What are holiday let insurance premiums?
Holiday let insurance premiums are the prices you pay to protect your holiday home from unexpected events.
Since properties being rented out to paying guests require specialized insurance, the cost of the policy will be provided to you in a quote tailored to your specific requirements.
This can come at a higher cost than regular home insurance.
Just like your home insurance, the cost can vary depending on many different factors. In the following post we’ll explain the costs for you so you can get a better understanding of where your quoted figure comes from.
How are holiday let insurance premiums calculated?
Holiday let insurance premiums are calculated by weighing up a multitude of factors.
Providers will base their quote on several factors when determining insurance coverage for a property. The type of property and its cost of rebuilding are the main factors.
Additionally, the age of the property, the level of contents insurance needed, and the location will also be considered.
Here are the main factors that a provider will base their quote on:
The location of the property
Cost of re-building the property
The age and structure of the property
Additional extras such as legal costs and employer’s liability cover
Previous ‘no claims’
Your lifestyle
The value of contents
The excess amount
You will be required to submit the valuations of things such as contents and re-building costs and you’ll be given the options to choose different excess amounts and additional extras.
All amounts will vary depending on the provider and your specific circumstances.
How much are average holiday let insurance premiums?
An annual holiday let insurance cost can be anywhere from £150 to £500+.
Let’s say you get your re-building quote from the surveyor and it’s £215,000, and you work out that you need £35,000 of contents cover, this would amount to a premium of around £250 a year.
This estimate would be based on all other products like public liability insurance being provided as standard.
There are many providers that offer a standard, combined policy which provides basic cover. The cost will be dependent on the property itself, and what the provider offers as part of their standard policy.
You need to be prepared to compare your quotes and do your research to make sure you find the right policy for your property. Opting for the cheapest policy on the market could result in you being under insured, and could end up costing you more in the long run, should anything unexpected happen.
Does the location of a property affect holiday let insurance costs?
Yes, the location of the property will affect your holiday let insurance premium. This is because it is likely that more insurance claims will occur if the area is subject to severe weather conditions or subsidence, or if the property is in an area that has an increased level of crime.
Both of these factors may result in your premium being higher than expected.
For example, if your property is close to a river, canal, waterway, stream or the sea, then it will generally be more expensive to insure because the risk of the property flooding is much higher than a property that is not located near to any of these features.
If you have not yet purchased your holiday home, then you will need to take the cost of insurance into consideration before you purchase a property that may be affected by these circumstances.
Will my mortgage type affect my holiday let insurance premiums?
You may be declined a quote from a provider if you have not yet completed on your house purchase, or if you already have a certain type of mortgage, for example, if you have previously been a landlord and rented the property out to tenants.
You should make sure that you specify the type of mortgage that you have on the property when you request your initial quote. Find out more by reading our guide to holiday let mortgages.
Is there a way to reduce holiday let insurance premiums?
As we have discussed, there are many varying factors that affect the cost of your policy. If your holiday let insurance premiums are a little on the high side, you can check out these factors to see if they can help reduce your costs.
Top 8 tips for reducing holiday let insurance premiums:
Check you’re not over-insured
Improve your properties security
Combine your policy with another if possible
Get quotes from competitors
Keep your no claims discount
Amend your excess to a higher amount
Check for additional admin costs
Annual vs monthly payments
What are optional extras and how much do they cost?
Optional extras are offered to cover you for things that are not included in the standard policy. This can include things such as legal expenses and employer’s liability insurance.
The costs of these will vary depending on the amount of cover you need. Most providers offer a limit on the amount that they will cover you for these items. For example, legal expenses can be capped at £250,000 for some providers, whilst others can offer much more.
These varying factors will affect the cost of your insurance. You can read more in our complete guide to holiday let insurance.
Are holiday let insurance premiums paid annually or monthly?
Insurance premiums are usually paid either monthly or annually. Annual payments tend to work out a little cheaper than the monthly payments, however is obviously more to pay in one go.
Make sure that you get a quote for both annual and monthly payments, so that you can work out the difference.
Does renewing policies reduce holiday let insurance costs?
If you’ve had any additional work done to the property, or if you’ve added any features such as a hot tub, then you’ll need to declare this to your insurer.
This should be done as soon as the amendment has been made, however if you haven’t had the chance to inform them before your renewal date, make sure that you do this before the quote is automatically renewed.
In some circumstances, the renewal may end up being more expensive if alterations have been made to the property, but it is imperative that you keep your provider informed so that you do not end up being under insured.
How does the amount of excess affect holiday let insurance premiums?
Usually, you will be required to pay an excess on any claim. The amount of excess will vary and, like most insurance policies, you have the option to select a higher or lower amount.
Note: Claims for issues such as burst pipes and water damage can require larger, independent excesses. This will come at an additional cost. Make sure that you check this with your provider.
How does the age and structure of a property affect holiday let insurance premiums?
Older properties will generally be considered less stable. The older the property is, the more likely it will be to need repair or succumb to damage from weather. The same applies to the structure of the property.
If the property is not classed as a standard structure, for example a log cabin, then it could be more susceptible to damage from weather. Due to it’s structural integrity, this could result in a much higher premium because the risk of it succumbing to damage is much higher.
The provider will also factor in the risk of the property needing to be completely re-built due to excessive damage. If your property is old or made of a weak structure, then it may not withstand damage that a newer or more secure structure could.
The cost of re-building a property is the most integral factor of holiday let insurance premiums, so if you have not yet purchased your property then you may want to consider the age and structure in relation to insurance costs before you do so.
You are responsible for providing the insurer with an accurate quote for re-building the property. If you provide a valuation that is too low, you run the risk of being under-insured.
How do you find out the re-building cost for your property?
In most cases, insurance providers offer protection for standard construction, which means the house is built out of brick, stone or concrete and topped with concrete, slates or tiles. It’s imperative that the valuation you give to the insurer accurately reflects the cost of re-building the property.
A general market value of the property is not sufficient, it is best to employ the services of a professional surveyor.
What if the property is not classed a standard construction?
It is more difficult to get a quote for re-building a property that is not of standard construction.
This includes lodges and other less permanent structures.
Flats are also difficult to value accurately, because they are part of a larger structure and this makes it difficult to get a quote for the property independently.
That is why using a chartered surveyor is the best option to get the most accurate quote and professional advice. You’ll need to instruct them to give you a thorough report on all of the the rebuilding costs.
Note: It is your responsibility to provide an adequate quote for the cost of rebuilding your property. Don’t be tempted to provide lower valuation of your property to get a cheaper quote. You’ll find yourself regretting it if the property is struck by a disaster.
Can I get a no claims discount?
Yes, providers will usually offer a no claims discount. If you have gone over several years or so without a claim, you will usually be liable for some sort of discount.
This will vary depending on the provider and the level of cover. Just like any other insurance policy, the longer you go without submitting a claim, the cheaper your policy will be.
Are there any admin charges?
Be aware of any additional admin charges. You may not realise that you are paying for something that is not required.
Be sure to check the small print and look out for any extra charges that aren’t explained. Remember to ask if you are unsure what they are for.
What are insurer approved locks and how do they affect holiday let insurance premiums?
Whilst requesting a quote for your property, you’ll be asked what type of locks you have installed. Most insurance providers will have a list of approved lock types that will reduce your premium if you have them fitted at your property.
The locks on those lists will be have been approved due to their higher levels of security and because they conform to British Standards (often referred to as the BS3621 standard). Having approved locks installed in your property will help to reduce the cost of your premium.
You need to make sure that you submit the correct information about your locks to your provider.
If you are unsure, then take the time to do the research to find out. If you make a guess or submit false information then your provider may deny to pay your claim.
Is there a cancellation fee if I choose to stop letting my property?
It can be common for owners to take the decision to stop letting out the property to guests. In this case, you may not require the full insurance that you are currently paying.
If you no longer need the insurance, you should inform your provider in writing as soon as possible. Cancellation charges can vary, so be sure to check this before purchasing a policy.
If you keep your property as a holiday home but no longer rent it out to guests, then you may not want to cancel completely. Instead you can speak to your provider about switching to a more appropriate policy for your needs.
We hope that we have helped to explain holiday let insurance premiums in more detail for you. For more information on how to start holiday letting, read our guide on planning a holiday let business model.
Need help with the next steps of your holiday letting journey?
If you're thinking of buying a holiday let or just need some advice, our property experts can help answer any queries you may have.
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.
Charlotte Beautement, Holiday Let Content Writer
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