Running a holiday rental can provide an additional source of income, but it also brings responsibilities and risks that don’t typically arise with an owner-occupied home. Your decision to enter the industry may involve many considerations, not least of which is likely to be the appropriate holiday let insurance.
The following is offered to help you avoid some of the insurance risks owners of holiday rentals often miss. We’ll help to explain how UK holiday home insurance differs from insurance for both owner-occupied homes and long-term let properties.
Why isn’t standard home insurance suitable for a holiday rental?
A holiday let is used differently from an owner-occupied home, typically involving multiple short-term guests throughout the year.
Your home is where you live your day-to-day life. It is your principal place of residence, likely to be shared only with close members of your family. That is the basis on which risks are assessed and your standard home insurance policy underwritten.
When your second home is a holiday let, the risks are quite different. They are changed because the property is not a place of permanent residence, but is let to temporary, short-term guests. A successful holiday let is designed for a high turnover of such short-term guests. The high seasonal demand for holiday bookings may be used to balance out the out-of-season months when the property may be empty – potentially for relatively long periods.
The high occupancy rates during the height of the season, a high turnover of temporary residents, followed by times when the property may stand empty for months at a time, are just some of the reasons why insurers calculate the risks to be different and this is why owners may need insurance designed specifically for holiday lets.
Further reading: UK holiday home insurance vs standard home insurance: what’s the difference?
Guest accidents and liability
The high turnover of guests in holiday let accommodation means that many of the temporary residents will almost certainly be unfamiliar with the layout of the property – and, in particular, any areas where special caution may be needed.
Guests who are new to the property may be victims of slips, trips, and falls on staircases or steps, and in outdoor areas such as pools or hot tubs.
However carefully maintained your holiday let, there may be undetected risks posed by faulty or defective furniture or failed fixtures and fittings.
Any of these hazards may result in one of your guests, a visitor, a neighbour, or even a member of the public, suffering an injury or having their property damaged. They may hold you liable for the injuries and damage caused. In that event, you may be ordered to pay a substantial sum in compensation.
Property owners’ liability cover may help with covered legal costs and compensation arising from an insured liability claim, subject to the policy terms and limits. To provide sufficient cover for events that might result in serious injury or even death, property owner’s liability insurance may be as high as £2 million, £5 million, or even more.
Beware, however, that by no means all holiday rental property insurance policies may incorporate such indemnity. You may need to check the insurance documents.
Further information: Holiday home liability insurance: protecting yourself from guest claims
Does holiday let insurance cover guest damage?
Unlike the landlord of long-term rental property, you are unlikely to require rigorous or detailed references and background checks on the many short-term guests of your holiday let. Although this may make the whole business of lettings more straightforward, short-term guests in your UK holiday home may pose a greater risk – and one that you may want your holiday let insurance to cover. The possibilities for effective cover may include:
Accidental damage
- damage to the structure and fabric of your holiday home or its contents may happen accidentally;
- cover against accidental damage may be included as standard in your chosen insurance for holiday rentals – but it is by no means certain since it is sometimes available only as an optional extra;
Malicious damage
- on occasion, a guest may cause malicious damage;
- although this risk may not be covered as a standard feature of your chosen holiday let insurance policy, it may be available as an optional extra;
Theft by guests
- from time to time, you may discover that guests have stolen items from your holiday let;
- while such thefts by guests may be covered by your chosen insurance policy, this may not always be the case or may be available only as an optional extra;
Damage to contents and furnishings
- where there is damage to contents or furnishings – which has occurred other than through normal wear and tear – your holiday let insurance may cover the loss;
- however, the nature and extent of such cover may vary from one policy to another.
UK holiday home insurance policies may (or may not) cover some or all of these instances of damage caused by guests. But policies may vary significantly. It remains important, therefore, carefully to check the precise terms, conditions, and exclusions of your chosen policy.
Does UK holiday let insurance cover lost rental income?
When you are running a holiday rental, you are running a business. The income generated is essential to the ongoing health of that business. Any interruption to rental income, therefore, is likely to be most unwelcome.
That interruption may occur after an insured event that leaves your holiday rental property temporarily uninhabitable – and, so, unlettable – pending reinstatement and the necessary repairs.
Some holiday let insurance policies – but by no means all – may offer compensation for such loss of rental income (within limits and according to the terms and conditions detailed in the relevant policy documents).
What happens when a holiday let is empty?
Holiday lets may be unoccupied for extended periods, particularly outside the main letting season. Some policies impose additional conditions or restrictions when a property is empty for a specified length of time. These might include requirements relating to inspections, heating, water systems or security.
Check your policy wording to understand how periods of unoccupancy affect your cover and what you are required to do.
Reducing your insurance risks
As with any other type of property insurance, when you arrange insurance for holiday rentals you bear responsibility for mitigating the risks of loss or damage. Your insurer is entitled to expect you to take reasonable precautions to reduce your insurance risks.
What practical steps might you take to do this? Here are just a few suggestions:
Regular maintenance
- your policy may require you to keep the property in a good state of repair and take reasonable precautions to prevent loss or damage;
- carry out regular maintenance checks and arrange necessary repairs promptly;
Safety checks
- of course, you want to avoid your guests – or yourself – suffering an injury because some space in your holiday let is unsafe or a piece of furniture is defective;
- by regularly checking that everything is safe to move around in and use, you may also avoid the risk of potentially expensive liability claims;
Documented inspections
- regular maintenance and safety inspections offer important opportunities to foresee and avoid future problems;
- but it’s critical that these inspections are not only carried out but also properly logged and recorded;
Reputable contractors
- so that scheduled maintenance and ad hoc repairs are made to a suitable standard, you may want to ensure that you engage only the most reputable contractors;
Holiday let insurance
- appropriate holiday let insurance can help protect you against a range of financial risks and, so that it continues to provide optimum protection, may need to be reviewed annually;
- whatever schedule you maintain for reviewing your policy, however, make sure to keep your insurers informed of any material changes.
Holiday homes and legislation – England
If you let a self-catering holiday home in England, there are a number of legal and regulatory requirements you may need to meet. These can vary according to the property and local area, so it is important to check the rules that apply to you.
According to current Government guidance, areas to check include:
- Registration – the Government is introducing a mandatory national registration scheme for short-term lets in England, although this is not yet in force;
- Planning permission – check with your local planning authority whether permission is required for using the property as a short-term holiday let;
- Business rates and tax – depending on the circumstances, business rates may apply instead of council tax. The former Furnished Holiday Let tax regime was abolished from April 2025, so you should also check the current rules for declaring and paying tax on rental income;
- Fire safety – holiday accommodation must comply with the relevant fire safety requirements, with different guidance applying according to the size and complexity of the property;
- Gas and carbon monoxide safety – check and comply with the applicable gas, smoke alarm and carbon monoxide safety requirements;
- Electrical safety – owners need to comply with the relevant electrical safety requirements and guidance;
- Licences – you may need a TV Licence or music licence depending on the facilities and entertainment you provide;
- Energy performance – check whether your holiday property requires an Energy Performance Certificate (EPC);
- Insurance – consider appropriate insurance for the property and its use as holiday accommodation, including buildings, contents and liability cover where appropriate.
Your local authority should also be able to advise whether additional local requirements apply and what documentation you need to provide.
Rules and legislation can change, so always check the latest official guidance before letting your property and periodically thereafter.
See the GOV.UK guidance on letting out a self-catering holiday home in England for the latest information.
Holiday homes and legislation – Scotland, Wales and Northern Ireland
The rules differ across the UK. If your holiday property is in Scotland, Wales or Northern Ireland, check the relevant government guidance for your nation.
Requirements can change, so always refer to the latest official information and check with your local authority where appropriate.
What insurance might owners consider?
Consider the types and levels of cover you require and check whether the policy you are considering provides them. That range may vary widely not only from insurer to insurer but also from policy to policy. Features you may want to consider include:
- buildings insurance – for the protection of the structure and fabric of your holiday let;
- contents insurance – to safeguard the contents;
- property owners’ liability cover – to provide indemnity against claims from third parties who have sustained an injury or had their property damaged;
- accidental damage cover – sometimes included as standard but may also need to be added as an optional extra;
- loss of rental income – compensation for lost rental income if an insured event renders the holiday let temporarily unlettable pending repairs and reinstatement; and
- legal expenses cover – which may provide cover for certain legal costs and disputes, subject to the policy terms and conditions.
Make sure to examine the details of any insurance proposal since not every policy may offer cover in all these areas.
Further reading: UK Holiday home insurance checklist: what cover should owners consider?
Conclusion
Holiday rental properties can present a range of risks beyond those associated with the average home. Those distinct risks are likely to revolve around the high turnover of temporary, short-term guests when the season is in full swing, followed by potentially several months when the property stands empty and unoccupied.
The risk profile of your particular holiday rental may make it especially important to regularly review your insurance arrangements for the property in line with its evolving use.
To find out more about holiday let insurance and the cover available, you can contact us online or by calling 01702 606 301.
Further information: Guide to UK Holiday Homes
Disclaimer: This article is for general information only and does not constitute financial or insurance advice. Insurance cover, limits, conditions and exclusions vary between insurers and policies. Always check the relevant policy wording and documentation carefully to ensure the cover is appropriate for your needs and circumstances.
