According to government statistics last updated in August 2016, some three and half million people in Britain own a second home. The great proportion (almost 60%) of these are holiday homes and the other main purposes are:
- investment properties – in other words, buy to let properties (47.7%);
- living away from home (19.9%);
- use as a retirement home (13.6%);
- previously the main home (12.5%); and
- for other reasons (11.8%).
On the basis of 60% serving as holiday homes, that represents some 2.1 million properties. According to a report in the Telegraph newspaper in November 2015, that figure may grow still further as investors take advantage of the tax relief which continues to be granted on “furnished holiday lets” – reflecting a possible switch away from the popularity of standard buy to let properties.
If you are an owner occupier, your property serves as your main place of residence. That is the basis on which your residential mortgage is likely to have been granted, taking into account your regular sources of income from work. Typically, the insurance you arrange is standard home building and contents insurance.
When you invest in a buy to let property, on the other hand, the criteria adopted by any mortgage lender are different. Affordability of the loan is assessed on the estimated income from rents – since buy to let property is essentially a business proposition and the mortgage company takes an interest in the likely commercial success of that venture.
Insurance for buy to let property also recognises the distinction that arises from the dwelling used for essentially commercial purposes and therefore takes the form of purpose designed buy to let property insurance for landlords.
So where does that leave your holiday home?
It is fair to say that it probably falls between both your regular home insurance and buy to let insurance. It may be used as a second home for you and your family’s own enjoyment; but you might also decide to let it at other times of the year in order to generate an income from the rents received – and turn your holiday home into what is essentially a business proposition.
In that case, neither standard home building and contents insurance that might be arranged by an owner occupier, nor the buy to let insurance that is likely to be arranged by a landlord, offers suitable cover for your holiday home.
Instead, specialist holiday home insurance is required and may be arranged through us here at Cover4LetProperty.
What does it cover?
Just as you might expect, holiday home insurance draws on elements of cover from both standard home insurance and let property insurance:
- at the heart of the cover is protection of the very structure and fabric of your holiday home against such major events as flooding, fire, storm damage, impacts, vandalism and theft;
- it might only be a second or holiday home, but you may have invested a substantial amount in the contents over the years – especially if you are also catering for paying guests as tenants during part of the year;
- a careful inventory needs to be made, therefore, so that adequate insurance may be arranged for the contents;
- important for any property, but especially so if you are letting the home to tenants from time to time, is the question of property owner’s liability;
- if one of your visitors, a tenant, a neighbour or a member of the general public is injured through contact with your holiday home, or has their property damaged, you may be sued for a breach of your duty of care as the landlord and property owner;
- property owner’s liability cover is designed to indemnify you against such claims – and, in recognition of the size of claims that might be made, typically offers at least £1 million of indemnity;
Loss of rental income
- if an insured event causes sufficient damage to leave your holiday home temporarily uninhabitable, you stand to lose the rental income you might otherwise have enjoyed from paying tenants;
- this type of let property insurance, therefore, may offer compensation for that loss of rental income – up to prescribed limits, which are often related to a percentage of the total sum insured.
As may be clear, therefore, cover for your holiday home requires a particular form of let property insurance – purpose designed to distinguish it from both standard home insurance and from landlord’s buy to let insurance.
Because of the separate and specialist nature of such insurance, you might want to consult an experienced provider of such cover, so why not get in touch?