How Does Holiday Let Insurance Work?

'How does holiday let insurance work?' is a common question that we at Sykes get asked, especially by owners who are at the very beginning of their holiday letting journey.

Many newcomers to the holiday letting industry make the mistake of thinking that they can use their home insurance for their holiday let. unfortunately it’s not sufficient for the cover that you need.

Lets take a closer look at insurance for holiday letting and how it works.

What is insurance for holiday letting?

Holiday let insurance is tailored to the specific needs of a holiday letting business, providing cover for things that you wouldn’t need for regular home insurance.

With holiday let insurance, you need to protect yourself against things such as damage caused by your guests, and public liability insurance should one of your guests have an accident in your property.

This is a business after all, so you need to consider employers' liability insurance and loss of income due to unforeseen circumstances. These are all types of cover that aren't provided under regular home insurance policies. That's why you'll need a specialist insurer for your holiday letting business.

How does holiday let insurance work?

So, how does holiday let insurance work? Well, unlike your home insurance, holiday let insurance comes with many extras that protect you against certain financial risks that come with running your home as a business. Holiday let insurance works by protecting you against those financial risks.

The risks, such as guests having an accident, or the property being more susceptible to break-ins due to lying empty, can require a higher level of cover than your average holiday home insurance.

This kind of insurance is tailored towards the business aspect of your holiday home. In order to get you an accurate quote, your provider will most likely require much more information than what you would provide for a regular home insurance quote.

Your holiday let insurance provider will consider various risks based on the information that you have provided for them, in areas such as:

• The security of the property

• Property location

• Re-building costs

• Property age and structure

• Employers' liability cover

• No claims discounts

• Lifestyle

• Contents valuation

• Excess

Click here for Holiday Let Insurance from Pikl.*

Can I use my home insurance and just add on these extras?

Your home insurance is unlikely to provide the correct kind of cover that you need. Holiday let insurance works by catering to the specific risks of your holiday let as a business that receives paying guests, and has greater financial risks that are not associated with your regular home insurance.

Although it may be tempting to try and keep your costs low by using your home insurance, you'll be leaving yourself financially exposed to many pitfalls that could cost you greatly in the event of a fire or serious accident had by one of your guests.

How do I find out the re-building cost of my property?

This part of holiday let insurance works in the same way as your home insurance. You need to give your provider an estimated cost to rebuild your property if the worst should happen. The figure is calculated based on a number of factors, and it is not the same as the valuation figure for your property. The rebuilding cost of your property is referred to as the ‘sum insured’, and this is the complete cost of rebuilding your property from scratch.

Your insurer will need specific information in order to provide you with an accurate quote. You need to make sure that this figure is correct to avoid overpaying on your premium, or being underinsured.

To make sure that you don't over or under insure your property, read how to calculate your buildings ‘sum insured’ for a holiday let.  If you're unsure about your requirements for buildings and contents insurance, you can read our guide to buildings and contents insurance for holiday lets.

Does my property need extra security for holiday let insurance?

Holiday let insurance works by evaluating the risks associated with letting our your property. One of the biggest risks to holiday let owners is the security of the property. Not just when it's occupied by yourself or paying guests, but also if the property is left empty during off-peak seasons.

Guests and Security

Security is a huge risk to insurance providers, so you need to consider how to protect your property from burglary and theft. Remember that your guests will not have visited the property before, and could end up leaving doors unlocked. There may also be multiple keys to the property too, to cater for large parties. All these factors will affect your holiday let insurance.

Off-peak Security

Holiday lets are often left unoccupied during the off-peak seasons, and this can leave your property vulnerable to being burgled. Insurance providers will weigh up the associated risks when calculating your premium, so be sure to provide accurate information about the occupancy of your property.

To find our more about how security and holiday let insurance works, read our guide to holiday let security.

Public Liability and Holiday let Insurance

Paying guests suffering an accident in your property is not something that you need to think about with regular home insurance, but in the holiday letting business it's an essential component. No one likes to think about it too much, but if one of your guests suffers an accident in your property, then you could be financially liable to pay compensation.

Holiday let insurance works by providing you with significant financial cover, to protect you against any compensation that you might be liable to pay to a guest in the occurrence of an accident.

The provider will weigh up the risks that are associated with your specific property, so it's important that you get the right level of cover to meet your needs.

If you want to let your property with a property management company, then you'll be required by contract to have a minimum amount of cover for public liability.

To make sure that you get adequate cover for your business, read our post about public liability insurance for holiday lets.

Summary

If you’ve been considering setting up a holiday letting business, you’ve probably thought 'How does holiday let insurance work?' and we hope that we've answered your questions on this post.

For more information about insurance premiums for holiday lets, you can read our blog post holiday let insurance premiums explained or you can read our complete guide to holiday let insurance  for everything you need to know about insuring your business.

Ready get your holiday letting business underway? Download our free owner pack below or speak to a dedicated member of our property experts team 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