More people are buying holiday homes for their own personal use, to let out to holiday makers or simply as an investment.
Whatever the reason – it could be a combination of all 3 – buying a property costs a lot of money. Even a small, cheap apartment will set you back thousands of pounds.
An investment on this scale requires looking after and it’s not just about maintenance of the property, although that is important. There are all sorts of risks associated with a holiday home which is where insurance comes in.
Just like your main residence, you should insure your holiday home for peace of mind against unexpected events.
If you own your holiday home outright, meaning you have no mortgage on it, there is no law to say you must have insurance on the property. However, there are very good reasons why you should take out holiday home insurance.
If you have a mortgage on your holiday home, you will be required to at least have buildings insurance as part of the terms and conditions of your mortgage agreement. Your lender will not insist on contents insurance, but you should seriously consider it.
Holiday home insurance is different to home insurance on your main residency and there are at least 30 insurers who specialise in this type of cover.
First you have to decide what you will be using your holiday home for, then you can see clearly what sort of holiday home insurance you will need.
Will your holiday home be used just by you and your immediate family?
Is it for use by you and your extended family and/or friends?
Will you be only letting it out to people you know?
Will you be letting it out to strangers?
There are different risks involved in how you use your holiday home so it is essential that you get the right cover. There are other considerations that the insurer will want to know.
Will you be managing the property yourself?
Will you employ a letting agent?
Who will be cleaning the property?
Who will be maintaining the property?
How long will the property be unoccupied for?
There are a range of options that holiday home insurance will cover and it depends on the insurer and the policy.
Holiday homes are not occupied all of the time so are more vulnerable to burglary, vandalism, squatting and damage. Some policies will insist that unoccupancy must be no more than 30 or 60 days. It is possible to get insurance if unoccupancy will be longer but that will be reflected in a higher premium.
The buildings insurance cover should be based on the rebuild cost of your holiday home and any outbuildings and features such as a swimming pool.
You should make a list of all the contents in your holiday home and how much they are worth. If you are renting it out you should have an inventory anyway so you can keep a tag on anything that goes missing, gets broken or damaged, or needs replacing due to wear and tear.
If there are any expensive items, you would need to tell the insurance company as there will be a limit on how much it will pay out if they are damaged or stolen. Some holiday home insurers will not insure valuables such as jewellery and artwork.
If you are renting your holiday home out, it is a good idea to have public liability insurance. This will cover you if anyone renting your home is injured within the property and it is considered the owner’s fault.
For example, someone trips over a badly fitted carpet and sues you for a broken foot. Public liability insurance will cover the legal costs and any compensation payout.
Many insurance policies do not include accidental damage as standard so you should consider adding this on for both buildings and contents. This will cover you for accidents and breakages caused by your guests or by you or your family.
Some insurers will require proof of the guest's stay if you need to make a claim such as a signed rental agreement.
Again, not all policies include malicious damage as standard but some insurers may allow it to be added on. Malicious damage is when someone deliberately damages your property or the contents. This could be guests staying in your holiday home or someone who breaks in.
If you suspect malicious damage, you should inform the police and your insurance company and take photos and/or video of the damage.
If you are not in the property, especially if you do not live near it, home emergency cover can be useful.
Guests may report that the boiler has broken down or the toilet doesn’t flush. With home emergency cover, you can ensure that a tradesperson will get out to investigate the problem and fix it.
Some policies will cover you for lost bookings if the holiday home is uninhabitable due to storm, flood, fire or other insured reason.
Not all insurance companies will cover large holiday homes that have 6 bedrooms or more, whether they are let or not. But there are specialist insurers who will cover large properties.
If you let out your holiday home to hen and stag parties, check with your insurer that they will allow this. Some insurers do not cater for potentially ‘wild’ parties.
There may also be restrictions on how long you can let your holiday home to one person or family. If you let your holiday home to someone for 6 months then it is not really a holiday home. The people living there are not ‘guests’ as such, they are tenants, and therefore you will require landlord insurance.
Other stipulations in insurance policies could be that you must have an up to date Gas Safety Certificate and other safety checks such as an annual boiler service.
Security is paramount for insurers so by making your holiday home as secure as possible the insurance company might bring down the premium. For example, you might install high standard locks on doors and windows, a burglar alarm, motion sensor lighting, CCTV (closed circuit television) and timer-controlled lights within the property.
Other problems that could occur if the holiday home is empty for long periods is burst pipes, especially in the winter if the pipes freeze. Consider covering all pipes with insulation and leaving the central heating on at a low temperature on a thermostat.
Some policies will state that the holiday home must be checked every 7 or 14 days if it is left empty for long periods of time.
If your holiday home has a garden, you might want to employ a regular gardener to keep the outside looking well maintained.
You should also fit a smoke detector and carbon dioxide detector and even have a fire blanket and small fire extinguisher in the kitchen.
You can also get holiday home insurance for leisure homes such as static caravans and holiday lodges. A standard policy will cover you for the usual scenarios of theft and damage due to fire, storms and flooding.
Some insurers will not insure leisure homes if you are in a flood risk area. Others might insure the property but remove the flood cover.
Even if your leisure home is in a flood risk area, you may still be able to get insurance. Often static homes are higher off the ground but storage facilities outside and under the home will probably not be covered.
Insurance companies are also more likely to consider insuring static homes that have been fitted with a flotation unit so the caravan can move up and down with the water level if flooding occurs.
There might be other exclusions on leisure homes like storm damage to fences, gates and hedges. Theft is not always covered unless there is evidence of forced entry.
Most park home sites close over the winter even if it is just for one month. Some insurance policies insist that if the property will be empty, water must be drained from leisure homes. If pipes do burst, there is no water in them to cause damage to the property or contents.
Some insurers include letting your family and friends stay as standard but if you intend to rent out your leisure home you will need insurance to cover this.
You can also get legal expenses cover for disputes between yourself and your guests and the site your home is on.
There are 2 options for leisure homes that are damaged beyond repair. You can opt for a ‘new for old’ policy where you insure your static caravan or holiday lodge for its full replacement value. The insurer then replaces it with a new model.
Alternatively, you could opt to receive the market value of your caravan. This is the value of the homes at the time of the claim, not when you took out the policy.
Older leisure homes tend to be more expensive to insure as they account for more claims than newer properties and cost more to repair.
If you are lucky enough to have a holiday home in another country, you have the option of taking out insurance in the UK or locally.
You might prefer to use an insurer in the country where your holiday home is situated but make sure you fully understand all the terms and conditions. Insist that you have a copy of the policy document in English, unless you are fluent in the language of that country. Ensure you will be able to speak to someone in English if you need to make a claim.
Different countries have different rules and regulations regarding insurance. There are insurers in the UK who will insure properties abroad and all the considerations outlined above in this guide will also apply to properties in foreign countries.
Some insurers will cover you for emergency travel to your holiday home and accommodation if needed. There will be financial limits on how much the insurer will pay for this. This could be due to a fire at the property and you need to assess the damage and deal with the repairs. It could be because of a burglary and you need to ascertain what has been stolen.
Maintenance of holiday homes is important in order to avoid damage to the property. If roof tiles fall off and rain gets into your home, you might not be covered as you have not kept the property in a reasonable condition.
In hot countries you might have your own swimming pool, which will require regular maintenance.
If you are renting your holiday home on a regular basis, you could employ the services of a letting agent who will cover all the maintenance, cleaning of the property and handing over of keys.