If you’re considering a second home in the UK or abroad, think carefully about how you intend to use this valuable asset. To make sure it brings you only peace of mind, you’ll need to tailor your insurance protection to cover your plans.
Will your second property be a weekend retreat, a home away from home that’s frequently empty, or a holiday let? Who will use it? You might be tempted to think that duplicating your existing home insurance will cover you, but it’s not that simple.
According to research published by the Resolution Foundation Footnote 1 in June 2019, more than 1 in 10 people across Britain now own second homes, buy-to-let and overseas properties worth £941bn. It’s highly likely, therefore, that insurers will have already developed the perfect plan for you.
Choosing the correct holiday house insurance
You may be enjoying the view from your hot tub, but most insurers associate second properties and holiday homes with increased risk.
They can be left empty for more than 30 days a year, so are more vulnerable to theft, weather or water-related damage. And, if you let your house to paying guests, there’s a further risk of personal injury or accidents.
If you're planning to let out your property, you’ll need specialist holiday home insurance designed to protect you, your house and any holidaymakers who rent it.
Sarah Jarvis, the owner of holiday home business Independent Cottages, also owns and manages two holiday cottages in the Cotswolds. She says: “The risks differ to those of an average household or second home. Guests may not take as much care when using the property, so owners must protect their investment and have the appropriate insurances in place. Not just for peace of mind, but financial support should a problem arise.
“When considering a policy,” she continues, “you should know exactly what risks are being covered and determine what is and isn’t important for your specific needs. It is also important that you understand the obligations you’ll have for the policy to be valid. For example, the maximum period that the property can sit empty and the installation of certain safety and security devices.”
What to include in your holiday rental insurance
Your holiday let insurance package will need to include more than just comprehensive contents and buildings cover.
Hazel Garrod, holiday letting expert at FBM Holidays in Tenby, explains: “If you are letting your holiday home, public liability insurance is essential and must be included in the policy.
"Public liability insurance protects against compensation claims made by a guest staying in your property in the event of accidental injury. As health and safety are so important, we always appraise each property carefully and discuss any concerns with the owner before it can go live and receive guests.”
Add to that employers’ liability insurance for cleaners, gardeners and any staff who help you run your holiday let. Again, wood-burning stoves, swimming pools, saunas and hot tubs all pose risks, and your policy should cover the equipment and people using it.
Inclusions give you peace of mind
To benefit from your holiday home, there are certain inclusions you should add to your policy. You’ll need protection for loss of rental income if your property can’t be let. For example, after a flood, replacement accommodation cover if your guests have to stay elsewhere.
Insurers tend to identify different types of damage. So, make sure your holiday home contents insurance covers accidental damage, malicious damage and if you welcome animals, damage caused by pets. Unfortunately, theft can happen too, so check for exclusions.
Water is the main threat facing holiday home-owners, so be clear on your water damage cover. In some instances, unless you comply with specific policy conditions while your home is unoccupied, escape of water claims are excluded.
Again, if your water is metered and there’s a leak, are you covered for the bill? For back-up, add 24-hour home emergency cover to include a plumber.
Why you need second home insurance
If your second home is for your use alone, you’ll need a specific policy given you won’t always be there. This will include buildings insurance to cover the cost of rebuilding your property (don’t confuse this with your home’s market value). If you have a mortgage on your second home, the lender will insist on buildings insurance.
Your most valuable possessions may not be in your second home, but make sure your contents are adequately covered. And, with a higher risk of break-ins while the property is empty, check your theft cover.
Most importantly, be sure that any unoccupancy exclusions suit your circumstances. Are there clauses that exclude vital cover when your property is empty?
Some insurers insist the water system is drained or turned off when the home is unoccupied, or the heating left on at a specified temperature (13C) during winter. How often are you required to inspect the property? Every seven days may not be convenient.
Overseas holiday home insurance for English speakers
Your dream could be a second home overseas, in which case a UK insurance company specialising in international properties is a popular option. This means your policy documents will be in English and you’ll have access to English-speaking claims experts. We don't offer cover for property abroad.
Insurers regard overseas homes as higher risk as they may be empty for longer, so comprehensive contents and buildings insurance is essential. In areas with extreme weather and earthquakes, cover restrictions may apply.
Perhaps you’re tempted to join those who rent out their properties on home-sharing sites, such as Airbnb? If so, you’ll need to inform your cover provider and request specialist host insurance. The good news is that it can be bolted-on to your existing policy.