Holiday Home Insurance

With many homeowners now looking to purchase holiday homes as an investment as well as a place to escape for some rest and relaxation it is important that we understand how to protect our second home.

The risks involved with owning a holiday home in the UK or abroad are substantially higher that those associated with your main residence therefore there is a real need for an insurance policy designed to precisely match your needs.

If you have taken out a mortgage to buy your holiday home the lender will insist that standard Buildings Insurance is in place. However do not be tempted to use a normal home insurance policy for this purpose. A normal policy usually excludes letting and periods where the property is left unoccupied. The insurer can invalidate your policy if you are seen to breach these conditions.

What does holiday home insurance cover?

As with your main residence you should cover your holiday home with the same protection over its structure and contents. Comprehensive buildings and contents insurance will cover you against loss, damage or theft. It will cover the structure of the property, fixtures and fittings as well as any furniture, carpets and electrical items. Read our full guides here on Buildings Insurance and Contents Insurance to see what should be included.

Most insurers see bigger risks associated with the letting of properties as well as periods where the property is left unoccupied which increases the risks of theft, burst pipes and flood claims. Based on this not all insurers offering standard home insurance will be willing to cover for your holiday home. Always check your policy wording to see what is covered and consider using specialist insurance companies who may offer more comprehensive cover for your needs.

If you are considering letting your property you must comply with certain rules and regulations to ensure you do not invalidate your insurance policy. Holiday homes in the UK will be subject to different rules and regulations than those in Europe and beyond therefore it is important to be fully aware of your legal obligations before your property is occupied. E.g. / In the UK properties are subject to fire and furnishings safety regulations. Owners are also required to obtain safety certificate for gas and electrical appliances.

How much holiday home insurance do I need?

When assessing the amount of cover needed you should apply the same principles as arranging your home insurance.

You need to be insured for the amount it will cost to completely rebuild your holiday home. This is not the same as the Market Value of your property. You can determine the rebuild cost of your home by appointing a surveyor from the Royal Institute of Chartered Surveyors (RICS) to assess your home. Many insurers also offer online calculators to determine the rebuild figure or offer “unlimited cover” policies. This may be especially useful for properties outside the UK.

For recently purchased properties in both the UK and abroad the Mortgage Valuation will contain the rebuild figure. It is important to keep this figure up to date in line with any changes in rebuild costs. Some insurers offer policies which are “index linked”. This will ensure the amount insured moves in line with the rebuild costs at the time.

When calculating an insurance value for your contents it is a good idea to make an inventory of items within your property. Not only will this help you work out the value of your possessions but will also be useful as a checklist for letting the property out or for the insurer in the event of a claim. It is not a good idea to leave personal items or valuables in your holiday home whilst it is unoccupied or if you plan on letting it out. It is worth noting that many policies will not cover you for these items anyway should you choose to leave them and subsequently suffer losses as a result.

Do I need additional holiday home cover?

Policies tailored specifically for holiday homes usually include all of the standard cover of home insurance as well as many relevant extras. It is vital to check the policy wording to see what is included and to ensure you are comparing like for like when shopping around.

Extra cover that may be worth considering for your holiday home;

• Accidental Damage - This is especially important if you plan to let your property out. Guests are often not as careful as you and therefore the risk of accidental damage to your property and possessions is increased
• Home Emergency Cover - This will cover any assistance or repairs due to a domestic emergency where you or your guests can speak to an advisor
• Public Liability Insurance - This will cover you for the death or injury to a third party on your property
• Employee Liability Insurance - This is important if you will have people working for you such as cleaners or gardeners and will cover you against any accidents or injury they sustain whilst on your property
• Personal Possessions Cover - Insurance can often be extended to cover items that leave home with you such as laptops and mobile phones. This may be useful if you plan on taking such items with you to your holiday home
• Loss of income - This will cover you for losses arising as a result of unforeseen circumstances such as a water leak that may result in your property being uninhabitable. During peak holiday season loss of rental income could run into thousands and therefore this is definitely one to consider
• Alternative Accommodation - If your property is uninhabitable due to unforeseen circumstances your insurer will cover the cost of placing your guests in alternative accommodation

As with all insurance policies it is wise to read the small print to see exactly what is covered and what is excluded. Many policies covering holiday homes insist on things such as the heating system being drained when left unoccupied. This could pose a major inconvenience for many owners.

Tips for cheaper Holiday Home insurance

Whilst it is important to ensure you are adequately covered for the buildings, contents and associated risks of letting or leaving your holiday home unoccupied there are ways in which you can look to save money when purchasing your holiday home insurance policy.

• Shop around - Be clear about what level of cover you need and make sure that you compare like for like when looking at different insurers. This also applies to renewal quotes - do not assume that this is the cheapest cover available.
• Consider the services of a specialist Insurance Broker who will be able to provide advice and a recommendation of the most suitable policy.
• Pay your premiums annually - Many insurers will include an additional charge on your premium for paying monthly by direct debit. Where possible this charge can be avoided by paying your insurance off in a one off payment every year.
• Raise the excess - Many insurance policies include an excess that you will need to pay in the event of a claim. Raising the amount you are willing to pay usually results in a reduction to your premium.
• Combine with your home insurance - Some insurers will offer a package of comprehensive cover over all properties owned. Be sure to check that this will still cover you if you let the property out.
• No claims discount - Insurers will usually reward those that have accrued a period of no claims on any of their owned properties with a cheaper policy premium
• Prevention - it often pays to take precautions against a claim. Installing a burglar alarm, high quality locks and fitting smoke alarms can all reduce your premiums.