This may be a very good time to set up your holiday lettings business. More and more people are realising the benefits of holidaying in the UK.
Setting up your holiday lettings business can be very exciting, but also challenging. There are lots of different things to think about, but one issue you really must not forget is your holiday let insurance.
Holiday let insurance is quite a specialised kind of insurance and not all insurers offer it. The reason some are reluctant to offer it is that there are quite a lot of risks attached to a holiday rental business. For the same reason, premiums will be higher than for a normal household policy. Nevertheless, you must not let these difficulties put you off, as holiday let insurance is absolutely essential.
When you are looking at different policies you will find that some cover more elements than others. With all the other expenses you have, you may feel tempted to go for the cheapest possible deal. But how do you know which elements of cover are essential, and which you can do without?
- For buildings cover, this should be at least as comprehensive as for your main residence. That is, the sum insured should be the total cost of rebuilding the property, not just the current market value. The higher cost of the premiums will reflect the additional risks – e.g. that a fire could be started accidentally by guests.
- Contents cover again needs to be at least as comprehensive as for your main home. Insure all furnishings and anything that you would take away if you are moving – and make sure it’s new-for-old cover, not market value. (Have you ever tried selling second-hand furniture?) As this is a holiday home, there is likely to be outdoor furniture as well as indoor, so make sure this is covered too. And look out for conditions in the small print, such as that outdoor furniture must be locked away when not in use. You can’t count on your guests always doing this! Plus you need to make sure the policy is valid for non-forced entry if windows are left open. Again, you can’t count on your guests always being as careful as they would be at home – after all they are on holiday! For the same reason it’s a good idea to insure against accidental damage to contents, such as stains, iron burns etc. – or alternatively you can take an inventory when each set of guests arrive, and charge a refundable deposit against damage. (You need to warn guests that they must have their own insurance to cover their own belongings.)
- Public liability cover – don’t skimp on this, whatever you do. Many people have thought they could do without it, with disastrous results. In fact, if you use a lettings agency, they will probably insist on proof that you have this cover, and on a notice saying so being displayed in the house. It covers you against claims for injuries your guests may incur on the property, indoors or outdoors, including the pool if you have one. This need not stop you from warning guests to take suitable care, and in particular issuing a disclaimer against liability for accidents involving unsupervised children in the pool.
- Employer’s liability – unless you live very near and are happy to do all the work yourself, you will almost certainly employ at least a cleaner, and perhaps a caretaker and/or gardener. If so, you are legally required to have employer’s liability insurance.
- Last but not least, you will need emergency cover for such events as, for instance, a fire which means you have to find emergency accommodation for your guests, and also put off and refund people who have already booked.
You can now see why premiums for holiday let insurance are higher! Anybody with experience in the holiday rental business will tell you that all these elements are essential and you skimp on them at your peril. But what you can do is consult a broker to find a reliable policy that won’t break the bank.