Sunday, 22 July 2012

Holiday Home Insurance – it's a Risky Business!

Have you ever been tempted to buy a holiday home and let it out? Or have you ever wondered what costs are involved in owning a holiday home? We asked a leading insurance broker to spell out some of the issues owners face in giving strangers a key to their property.

12 things to consider when insuring your holiday home


Letting a holiday home commercially has many benefits: however, there are also risks - such as not having the right insurance cover to protect your valuable investment. Holiday Home Insurance specialist, Boshers Ltd gives its top 12 things to consider that will make for a winning formula when insuring your holiday home. 

1.    Take advice – Your holiday home is likely to be one of your most valuable assets. Our top tip is take advice from a holiday home insurance broker who specialises in the furnished holiday letting market. They should take the time to understand your needs, importantly they will understand the risks involved in holiday letting and will have negotiated a package of covers to protect your financial interest in the property.

2.    Legislation – you may not think of furnished holiday letting as a business, however   by allowing paying guests stay in your property that is what it becomes. You have a duty of care to your guests, visitors and employees to ensure that you abide by all relevant legislation which covers areas such as health and safety, planning, building regulations, fire safety, gas safety and discrimination. 

3.    Disclosure – be open and honest with your insurer, it is your responsibility to provide complete and accurate information to your insurers when you take out the policy and throughout the life of your policy. Failure to disclose or giving false information in order to obtain insurance may deem your contract invalid and therefore be costly in the event of a loss. 

4.    Policy conditions – A specialist broker will make you aware of the benefits as well as point out clearly any conditions or warranties that may apply. Make sure that you fully understand the implications if you don’t comply. Excesses should also be considered.

5.    Employers Liability – cover to indemnify you against your legal liability to pay damages and legal costs arising out of bodily injury to an employed person such as a cleaner or gardener employed in connection with your holiday let business. 

6.    Public and Products Liability – cover to indemnify you against your legal liability to pay damages arising out of accidental injury to guests and other visitors to your holiday let and accidental damage to a third parties property caused in connection with your holiday let. This should extend to include liabilities arising from the maintenance of your property and premises and the provision of fire and security services maintained for the protection of your holiday let and the supply of goods sold or supplied by you, in connection with your holiday let business.

7.    Buildings – as well as covering you for standard perils such as fire, flood and theft, you may want to consider cover for accidental damage. Ensure that the buildings definition of your holiday home insurance policy includes all relevant items such as statues, fountains and hot tubs, swimming pools, tennis courts, paths, drives terraces, patios, walls, fences, hedges and gates, fixed aerials, satellite dishes, wind turbines, solar panels, yards, car parks, roads and storage tanks all on the same site.  Remember it is important that you insure for the full replacement costs of all of the above including the cost of architect fees and meeting relevant building regulations.   

8.    Contents – as well as covering you for standard perils such as fire, flood and theft, you may want to consider cover for accidental damage. Remember that contents includes all household goods, furniture and  furnishings  contained within your holiday let buildings and they should be insured for their full replacement value. 

Apartment owners may want to check their block buildings policy to ensure that it extends to cover fixtures and fittings within their apartment such as fitted, kitchen, bathroom and bedroom furniture. If not choose a holiday home insurance provider whose Contents definition will extend to include fixtures and fittings and a low for this when calculating your sums insured. 

It is also worth checking that the contents cover does not have any unreasonable exclusions such as excluding accidental damage when occupied by paying guests or theft exclusions unless by forceful and violent entry to the property.

9.    Underinsurance – saving money by under-stating your sums insured is a false economy. In the event of a large loss resulting in a claim a loss adjuster may be appointed. One of their first tasks will be to ensure that your sums insured are correct. In the event of underinsurance a deduction for `average’ will be made when settling claims. This means the amount that is paid out for any claim will be reduced in proportion to the degree of underinsurance, leaving you to fund the remaining.

10.    Loss of rental income – Cover for loss of your rental income should your holiday let be destroyed or damaged by an insured event which interrupts the letting of it. Ensure that the cover provided is sufficient to cover the typical annual revenue generated by your holiday let. In the event of a large loss, rebuilding can often take up to two years so ensure that the indemnity period is sufficient.  Be careful of policies that only offer cover for loss of income as a result of confirmed pre-bookings.

11.    Legal Expenses – To ensure an expert service this cover, if included in your holiday home insurance policy will often be arranged in conjunction with a specialist legal expenses insurance company.  Cover may be provided to indemnify the insured person in respect of an insured event in connection with your holiday let business.  You should look for cover which extends to employment disputes, legal defence where it is alleged that the insured has committed a criminal offence in connection with the running of their holiday let. In addition, debt recovery, taxation and vat disputes, the eviction of anyone from the property if they do not have the right to be there.  

12.    Loss of keys – The reasonable cost necessarily incurred in replacing door or window locks at your holiday let including locks to safes and alarms following theft or loss of keys.

Additional guidance and holiday home insurance quotes are available from the Boshers Holiday Home Insurance Team on 01237 429444 or visit Holiday home owners may also visit for further informative articles.

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