If you own a holiday lettings business, you have legal obligations towards your guests and the public. Any breach of these obligations can land you in legal and financial trouble. That’s why you cannot do without holiday let insurance.
This is even more true nowadays when people are increasingly likely to sue. Expectations by guests in holiday lets are getting higher, and features that were seen as luxuries a few years ago are now regarded as standard. Anything that doesn’t exactly come up to expectations can result in, at best, a demand for a refund or at worst, a lawsuit.
So a comprehensive holiday let insurance policy is something you cannot do without. If you have already tried looking for one, you will have discovered that these policies are more expensive and harder to find than normal household insurance policies. This, of course, reflects the number of things that can go wrong and the legal obligations you have.
So what are the essential elements of a holiday let insurance policy, that you wouldn’t find in an ordinary household policy?
- First and foremost, you must of course have indemnity cover. This includes public liability insurance which should be for at least £3 million – if you are using a lettings agency, they will usually insist on this as a minimum. This covers accidents and injury to guests and other members of the public. If you have a swimming pool, you should consider an even higher indemnity limit. Indemnity cover should also include employer’s liability insurance, which you must have if you employ anyone such as cleaner, caretaker or changeover staff.
- You also must have cover for accidental damage to contents. This will cost more than a similar element in your household policy, because with people coming and going there is much more scope for damage. You need to make regular inspections for damage and replace anything that’s spoiled or broken. It doesn’t give a good impression if guests arrive and find stained or chipped furniture, faulty electrical appliances or even a missing bath plug. Everything must be pristine if you are to be competitive in this market.
- Your holiday let insurance should cover loss of rental income. You hope this will never happen – but if there were to be an emergency that rendered your holiday property unusable, such as a fire or flood, you would have to cancel and refund bookings, and not take any more until the damage was repaired. If you were counting on the rental income to make the payments on your holiday let mortgage, this would be very serious – so cover is essential.
- For the same reason you need to have cover for alternative accommodation. If such an emergency were to happen while you had guests in the property, you would have to find them accommodation of a comparable standard – probably in a hotel. Some policies will also cover the cost of your emergency travel to the property when such an event takes place.
There are so many possible scenarios that you need to check your holiday let insurance policy carefully to make sure every possible contingency is explicitly covered.
You can see why holiday let insurance is more expensive than ordinary household insurance. The good news is that, as long as your business is recognised as a holiday let business for tax purposes, you can currently claim the premiums as tax deductible. So don’t try to skimp on it – it just isn’t worth it.