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Getting The Right Holiday Home Insurance – What Types Do You Need?

Getting your holiday home at last – what a thrill! Probably a dream you’ve had for many years. But don’t let the excitement make you forget all the mundane things you need to look out for. Including, of course, getting the right holiday home insurance.

If you think getting the right holiday home insurance is an optional extra, you couldn’t be more wrong. It’s one of the most crucial elements of your holiday home purchase.

And don’t think either that you can just add it to your ordinary household insurance – because you almost certainly can’t. Insurers offering ordinary household policies will turn up their noses at holiday homes. Why? Because they are usually a higher risk. Either they are left unoccupied for long periods, or they are let out to a large variety of people. Either way, they wouldn’t fit in to normal residential policies.

So to find your holiday home insurance policy, you need to look for a specialist holiday home insurer – and yes, it will cost you more than an ordinary household policy. But not having one could cost you much, much more!

So what types of cover must you have for your holiday home?

Buildings insurance. If you are buying your holiday home on a mortgage, you will be required to have this. If you are using another type of finance, such as equity release, DON’T regard buildings insurance as something you can do without. And remember not to insure it just for the market value – insure it for the full rebuild value (you can find help in calculating this on the ABI web site). Imagine how you would feel if it burned down when you weren’t there, and you didn’t have insurance to rebuild it!
Contents insurance. This covers everything you would take with you if you were moving house – furniture, furnishings, electrical appliances etc. You almost certainly won’t be able to include these on your normal household contents policy. Obviously, there’s more risk of things happening in a holiday home – burglary, flood, fire, damage from tenants etc. And don’t even think of concealing the fact that it’s a holiday home. Yes, of course you would get a lower premium – but they wouldn’t pay up in the event of a claim! In addition, you should remember to look for a policy that covers accidental damage, especially if you are renting out your holiday home. You can’t count on all your guests being as careful as you would be.
Legal liability insurance. This is very important, especially if you are letting out the holiday home – or even allowing friends to use it. In fact, if you are letting it via an agency, they will insist that you have it. It covers death or injury to people on or near your property, or from incidents associated with your property such as a falling tree. The policy should also include cover for legal costs – for instance if a tenant refuses to pay and you have to take them to court.
Cover for unforeseen events. If you are letting out your holiday home, you need to insure for anything that might occur during the holiday period that might affect your tenants or your business. For instance, if there was a fire or flood that made your property unusable, not only would you have to provide alternative accommodation for your visitors, but you would suffer a major loss of rental income. So double-check that any holiday home insurance policy allows this.

The major point to remember is that holiday home insurance is a specialised type of insurance and cannot be covered by ordinary household insurance. But getting the right holiday home insurance could make all the difference to whether your holiday home is viable or not. If you’re not sure where to find the right policy, ask a broker who will point you in the right direction.

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