If you own a holiday or second home in the UK and are considering letting it out to paying guests when you are not using it, then it is important you understand some of the additional insurance risks involved.
Even though you might do it only occasionally, and even though you’ve already arranged insurance for your second home, holiday home insurance for letting the property usually requires specialist cover – as we explained in our blog: Thinking of letting your UK holiday home? Here’s how it changes your insurance needs.
Specialist insurance
UK holiday home insurance is a “hybrid” type of insurance – standing somewhere between standard home insurance and landlord insurance.
You might recognise the similarities with the regular home insurance for the house you live in. This typically places the protection of the structure and fabric of the property – the building insurance – at its heart. That safeguards the home against a wide range of major risks such as fire, flooding, storm damage, impacts, vandalism, and theft (depending on the policy).
Getting the correct buildings sum insured
With both your standard home insurance and let holiday home insurance, it is important that the total building sum insured reflects the full cost of rebuilding if the premises are destroyed in a major incident. If not, you risk being underinsured – with insufficient funds to cover the reconstruction costs.
The Building Cost Information Service’s house rebuilding cost calculator can be used as a guide to rebuild costs.
Letting your holiday home
When you let your holiday home – even if it is only occasionally – you become a landlord. Your holiday home is temporarily run as a business. The income is generated through the rent you charge.
That business endeavour makes a world of difference to any insurer. For the duration of any letting, the home is occupied not by you and your family, but by strangers with whom you have only a passing commercial relationship. The turnover of such guests – especially during busy holiday periods – may also be high.
The business relationship, together with a potentially high turnover of short-term guests, represents a different order of risk compared with the main residence in which you and your family live. Insurers recognise that difference. Specialist cover that recognises this difference is required.
The obligations of a landlord
As a landlord – even of a holiday home – the law imposes on you a number of obligations towards the health and safety of your tenants. These cover issues such as gas safety, the inspection of electrical installations, fire regulations, and energy performance certificates – as detailed in this article.
In addition to those statutory regulations, you also have a duty of care towards all third parties. In that regard, you may be held liable if a guest, a visitor, a neighbour, or even a passing member of the public is injured or has their property damaged through some contact with your holiday home.
Since claims arising from any such incident may be substantial, landlord or property owner’s liability indemnity insurance may cover sums up to £2 million, £5 million, or even more.
Vacant periods
Holiday home insurance for letting also recognises that, unlike a regular landlord, you may be faced with significant periods of time when no one occupies your holiday home – neither you nor seasonal visitors and paying guests.
The issues, problems, and increased risks to a property that quite regularly stands empty and unoccupied for significant periods of the year are also described in this article that compares holiday home insurance with standard home insurance.
Understanding the difference
Understanding those differences between standard home insurance, landlord insurance, second home insurance, and holiday home insurance for letting is likely to prove an important exercise.
Need help?
If you require any help or clarification getting the most suitable property insurance for your UK holiday home, please contact us today for a no-obligation chat. We will be very happy to help.
