Everything You Need to Know About Holiday Let Insurance
Wednesday 8th January, 2025 by Host & Stay
Understanding what kind of holiday let insurance you need can be confusing so we’ve put together everything you need to know. In this guide, we’ll explore the critical aspects of holiday let insurance, why it’s important, what to look for in a policy, and tips for securing the best coverage for your holiday let. For peace of mind on holiday let insurance, we’re working with our partners at Pikl, who specialise in this specific type of insurance; a service which can be difficult to source on the open market.
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What is holiday let insurance?
What do I need holiday let insurance for?
What kind of insurance do I need for my holiday let?
What is my property rebuild cost?
Is holiday let insurance more expensive than standard home insurance?
Is it a legal requirement to have insurance for my holiday let?
Will standard home insurance cover my holiday let?
How do I secure the best policy for my holiday let?
What is holiday let insurance?
Holiday let insurance is different to standard home insurance, second home insurance and landlord insurance. It offers coverage for properties rented out to guests on a short-term basis. Unlike standard home insurance, holiday let insurance considers the unique risks associated with frequent guest turnover, potential liability issues, and the dual-purpose nature of the property.
Like a typical home insurance policy, holiday let insurance is comprised of two parts:
Core cover
This is the basic cover you get when purchasing a policy. This may contain buildings insurance cover, which covers the physical structure of the property, its fixtures and fittings. Contents insurance by contrast covers the items inside of the home. Depending on the cover you need, you could get holiday let insurance for just the buildings element, contents insurance, or both.
Optional cover
These aren’t mandatory purchases but may provide additional protection that can sometimes offer great value for money depending on what you require. Examples of cover add-ons typically sold as optional extras include legal expenses cover, home emergency and more.
What do I need holiday let insurance for?
With a number of guests coming and going, holiday lets can be subject to different kinds of risks compared to traditional buy to lets or permanent residences. Potential risks may include:
Burglaries and theft
As holiday lets are often left empty and guests can be less concerned about locking doors and windows, they can be vulnerable to burglaries and theft.
Your property being left vacant
Not being at the property regularly can make issues, such as leaks or burst pipes, worse as they aren’t rectified quickly.
Guest related issues
As holiday lets have different guests staying regularly, there is a risk of accidental damage to your property or a guest experiencing an accident themselves in the property.
Some of these issues may also be covered by typical home insurance policies but cover often varies quite a lot from insurer to insurer. Holiday lets are used specifically for holiday rental income, which means they often require more dedicated cover.
What kind of insurance do I need for my holiday let?
There are several cover options that might apply to holiday let owners, depending on your circumstances.
Public liability insurance
Public liability insurance helps safeguard you from legal issues and compensation claims if someone has an accident in your holiday let. Public liability insurance for holiday lets can relate to different types of cover, depending on the context:
- Property owners and personal liability
This relates to personal injury or third-party damage claims brought against the owner of the property. Examples of this could include if a delivery driver injured themselves on your property or poorly maintained electrical work caused a fire that spread to neighbouring buildings. - Host liability cover
This covers guest-related liability issues. Examples of potential guest-related liability issues are just as numerous and could also result in claims brought against you. If a guest tripped over a broken floorboard, for example, they may decide to claim against you. Likewise, if you were found liable for damage to your neighbour’s house because of guest activity, you may have to pay compensation.
Always double check that your policy covers you in the UK. It’s always worth checking the small print, especially if you aren’t a resident in the UK.
Theft and malicious damage
Theft and malicious damage by a guest staying at your holiday let is particularly important to consider, as not all insurers may cover this. Relevant issues that could arise include a guest stealing an item of yours during a stay, deliberate guest damages or damage due to reckless activity such as guests having a party.
Accidental damage
Typical claims for accidental damage such as a broken TV or a stain on a carpet are often minor compared to other types of claims. However, they’re also very common incidents that people claim for. It’s a good idea to check your property following a guest stay to make sure nothing has been damaged, and a deposit may cover some of these types of damages. Unfortunately, it’s not always possible to protect against all types of accidental damage claims and this cover feature is often included in holiday let insurance policies for this reason.
Loss of income following a claim
Whilst holiday let insurance is typically associated with fixing property damages, it can cover lost rental income for previously confirmed bookings following a damage claim too. Not having this cover could result in you losing vital income for confirmed bookings, put more pressure on you getting the property fixed as soon as possible, or cause additional stress on top of having to deal with your claim.
Legal expenses
Legal expenses cover can provide advice and allow you to pursue legal disputes that cover a wide range of issues, including consumer disputes, contractual problems, tax issues, negligence claims, property disputes, and employment issues.
Fire, storm and other types of damage
Holiday let insurance typically also covers the types of claims you’d expect to see in a regular home insurance policy, such as storm damage, escape of water and oil, subsidence, heave and landslip, and replacement locks.
Employer’s liability insurance
If you employ staff for cleaning or maintenance, this insurance covers claims related to workplace injuries or illnesses. This type of insurance is a legal requirement for a minimum of £5 million if you employ an individual at your holiday let.
What is my property rebuild cost?
The rebuild cost is how much it would take to rebuild your entire property from scratch if needed. Many insurers may automatically estimate how much this is based on the information you give them. However, it’s really essential you get this right for several reasons:
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- It covers the cost of rebuilding your entire home
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- If your rebuild cost is too high, then you could be paying for more than you need
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- Undervaluing the rebuild cost may result in only a certain percentage of your property being covered
If you’re unsure about your property’s rebuild cost, speak to a property surveyor or use a rebuild cost calculator.
Is holiday let insurance more expensive than standard home insurance?
The cost of taking out holiday let insurance varies like any other property insurance policy. There are some core factors that may impact the cost of your premium such as:
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- Location
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- Construction type
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- Previous claims history
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- Amount and type of cover purchased
Reducing your cover in order to get a cheaper premium may be tempting, but it may cost you more in the long run if you needed to make a claim and didn’t have the cover you needed. Instead, shop around for several insurance quotes to get the best premium for your needs.
Is it a legal requirement to have insurance for my holiday let?
If you’re operating a holiday let in Scotland, public liability insurance is a legal requirement as part of operating a short let licence. England may follow shortly too. Mortgage lenders typically also require insurance as part of the terms of your loan agreement. Even where there are no legal requirements, there are good reasons to consider purchasing insurance regardless. Holiday let properties are expensive investments. Fixing damage and dealing with liability or legal claims can be both stressful and costly.
Will standard home insurance cover my holiday let?
As mentioned earlier, you’ll likely need dedicated holiday let insurance for your holiday rental property. This is because a holiday let isn’t a primary residence that someone lives in and therefore comes with different risks.
Another issue to consider is what you are classing as a holiday let. If you rent out your main residence for a couple of weeks a year, your home insurer may be able to cover you. Key issues to consider are:
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- Each insurer may have a different definition of what they class as a ‘holiday let’ and what they are prepared to cover.
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- If a regular home insurer is prepared to cover you, check what cover you’ll get (as it may come with cover restrictions).
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- Consider going with a dedicated holiday let insurer instead when shopping around for quotes, if this is what the property is primarily used for.
It’s worth noting that if you plan to let your property through a holiday let management company, they may require for you to have holiday let insurance in place as part of your contact. At Host & Stay, we require all our property owners to have holiday let insurance in place. We recommend public liability cover for a minimum of £2 million for properties with up to four bedrooms and £5 million for properties with five bedrooms or more.
How do I secure the best policy for my holiday let?
To obtain the most suitable holiday let insurance:
Assess Your Needs
Consider factors like property location, size, and the amenities offered to determine necessary coverage.
Compare Providers
Research various insurers specialising in holiday let policies to find competitive rates and comprehensive coverage. Don’t forget to check their customer reviews too!
Review Policy Details
Examine exclusions, limits, and additional options to ensure the policy aligns with your specific requirements.
Consult Professionals
Seek advice from insurance brokers experienced in the industry to guide your decision.
Holiday let insurance is a vital tool for protecting your property, guests, and business interests. From buildings and contents insurance to public liability and loss of income cover, a tailored policy ensures you’re prepared for any eventuality. By carefully assessing your needs, comparing providers, and seeking professional advice, you can secure the right coverage and enjoy peace of mind as you welcome guests to your holiday let.
We have partnered with holiday let insurance specialists, Pikl. Contact them today to obtain your quote.
Disclaimer
All information in this article is accurate at the time of writing based on our research. This article does not constitute the giving of legal, financial or tax advice. Please contact your own professional advisor if you require advice in this regard.
*Host & Stay 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.