Posted on 14/02/2017 by David
You need specialist insurance for your holiday letting property. There’s a difference between the insurance on your home and a holiday letting property because the risks are different: there will be lots of different people staying there (possibly not taking as much care of the house as you would your own home), periods when the house is unoccupied and, most importantly, public liability insurance is required. The extra risk and cover means that you will typically pay a multiple of the amount that you would for your home insurance.
There are plenty of companies offering this type of insurance for a wide range of prices so it pays to do some research. Some policies may not give you all the cover you need or make additional charges for items that are standard on other policies. We have put together a simple checklist which may highlight some things you haven’t thought about but please note that your particular circumstances may require different cover, if you are in any doubt you should consult a suitably qualified person to advise you.
- Public liability insurance. Visit Wales require you to have a minimum level of £2,000,000 though typically coverage is £5,000,000.
- Damage. Insurance companies tend to identify different types of damage so make sure all are covered:
- Accidental damage by guests
- Malicious damage
- Damage from pets staying at the property
3. Theft. There are various categories of theft which you need to consider
- “Non-forcible” entry covers guests forgetting to lock the door or close a window, something your standard home insurance wouldn’t do.
- Theft by guests during their stay
- Theft of heating fuel
- Theft of garden furniture
- Contents. You may not realise just how much value exists in the contents of your cottage. Make an inventory of all the items and determine the value of replacing with a new equivalent item. Policies typically have a maximum value of a single item and the combined total value of all items.
- Loss of booking income. If the cottage becomes uninhabitable then you would lose your income for that booking and also for the time it takes to make repairs. Consider an extreme scenario of a fire or structural damage which could take many months to repair, how much lost income would be covered? There may be external factors which make it impossible to accept booking like a travel ban due to an outbreak of foot and mouth disease. Would you be covered for this?
- Replacement accommodation. If guests have to move out of the property due to a problem at the house they would need to be accommodated elsewhere.
- Emergency travel costs to cover your travelling to the property to sort out a problem.
- Legal fees if the guests take legal action against you.
- Loss of water from a metered supply. If nobody is at the cottage a water leak can go undetected for a long time and lose vast quantities of water. You may be covered for the damage it does but are you covered for the water bill?
- Hot tubs, swimming pools and saunas. The policy needs to cover the equipment and the people using it.
- Employer’s liability insurance. Do you employ someone to clean your cottage or to maintain the garden? If so, a minimum cover level of £5 million is legally required. If you use a cleaning company then it probably won’t apply to you but if your cleaner or gardener only works for you (especially if you supply the tools and materials and they work under your direction) then you need to consider this. HMRC has a tool for determining if someone is categorised as your employee for tax purposes but talk to an insurance specialist for more advice.
- Support services. If something does go wrong then the level of service provided by the insurance company can really help take the worry out of the situation. Does the company provide a 24hr help line, a legal help service?
It takes a bit of work to trawl through the terms and conditions and make the comparisons but having the peace of mind that you are adequately covered will make it all worthwhile. This effort will also highlight all the requirements you have to meet, for example there is usually a need for someone to visit the property if it is empty for a certain period of time (e.g. 3 weeks) and if you have an open fire the chimney must be swept at least once a year. Make sure that you follow the terms and conditions or you may not be covered.