What does UK holiday home insurance cover and why do I need it?

Posted: 21st Jul 2017

You are probably quite familiar with home insurance – as an owner occupier you are already likely to have taken the precaution of arranging home building and contents cover.

If you own buy to let property, you may also know about specialist landlord insurance, which protects not only the bricks and mortar of your let property but also a number of those risks and liabilities which threaten the business itself.

In many respects, holiday home insurance might be as a unique blend of both home insurance and landlord insurance, since:

  • you own the property and probably occupy it from time to time as your holiday home away from home; and
  • because you are not using it all of the time, however, a holiday home also offers an ideal opportunity for earning extra income by letting the property to paying guests for parts of the year – you effectively take on the role of landlord to a succession of short-term tenants.

The special – almost hybrid – nature of holiday home insurance is what distinguishes it from both standard home insurance and landlord insurance. So, if you own a holiday home you need holiday home insurance, rather than either of the other two.

Our own Guide to UK Holiday Homes may help to explain that need in somewhat greater detail.

Holiday let opportunities

Indeed, government policies make the opportunities for letting your holiday home still more attractive, thanks to the tax breaks available to owners of furnished holiday lettings. Unlike the changes to the tax regime affecting landlords of regular, full-time let property, as the landlord of a qualifying furnished holiday letting, you continue to benefit from tax allowances on the expenses of running the business, including mortgage interest repayments, which you may set against the profit you earn.

Details of the way the scheme works and how your property may qualify as a formal “furnished holiday letting” under these rules, you might want to read the detailed guidance (last updated on 6th of April 2017) on the government website.

So, what does holiday home insurance cover?

Just as there are many different types of holiday home, so there are various kinds of holiday home insurance. Nevertheless, all are likely to include the following key elements of cover:

The building

  • protection for the structure and fabric of the property itself against such potentially serious risks as storm damage, flooding, fire, impacts, theft and vandalism – some of which might result in your holiday home being completely destroyed and in need of reconstruction;

The contents

  • protection of the contents against theft, loss or damage – a detailed inventory may reveal quite how valuable, and expensive to replace, many of those contents may be;

Property owner’s liability

  • any property owner has a general duty of care to take all reasonable precautions against third parties, members of the public, or neighbours from sustaining an injury or suffering property damage through some sort of contact with your holiday home;
  • holiday home insurance needs to provide you indemnity against that source of claim, but needs to go further still because of similar liabilities you may have towards tenants and paying guests who become short-term tenants – in other words, an element of landlord’s liability insurance also needs to be included;

Unoccupied property cover

  • what also makes the holiday home a special case in insurance terms is the frequency and duration of periods when it is likely to be standing empty and unoccupied;
  • these are times when your holiday home is likely to be at its most vulnerable – not least because there is no one on the premises to raise the alarm if repairs or other immediate action is required;
  • at some times of the year, such as Christmas and New Year, your home may be stocked with all manner of expensive gifts for sharing with family members gathering at your holiday home – and these are likely to catch the eagle-eyes of would-be thieves and burglars;
  • the UK suffers at the hands of some 3 million burglaries and attempted burglaries every year, says the Crime Prevention website – and you do not want your holiday home to become yet another sorry crime statistic;
  • your holiday home insurance may cover against the risk of such thefts, but your insurer is still entitled to expect you to play your part in minimising and mitigating any such losses or damage.

Holiday home insurance therefore occupies a special place in the range of different types of property insurance – if you are fortunate to own such a second home, therefore, you might want to make sure that you have the appropriate, specialist form of holiday home insurance.