Holiday Home Insurance
If you are lucky enough to own a holiday home, you will want to protect your property in case something goes wrong. Insurance is therefore essential. But what sort of policy do you need?
A holiday home is vulnerable to the same risks as your main home. The roof could be damaged by a storm, flooding could ruin the decor, or a burglar could break in and steal your wide-screen TV. If you own a second home, you therefore need both buildings and contents insurance.
But standard house insurance cover is not enough for second homes because it does not normally pay out if you leave the property empty for more than 30 days a year. It will also typically exclude any lettings periods.
Why do I need holiday home insurance?
Insurers don't cover holiday homes as standard because they are considered too risky. If a home is left empty for long periods, for example, there is a greater chance of a burst pipe or a water leak. Theft is also more likely if a house is unoccupied. And if a home is let, tenants do not always take as much care of the property as the owners.
You therefore need insurance cover specifically for second or holiday homes. At moneysupermarket.com, you can compare quotes from a range of different insurers to find the best quote.
Buildings insurance covers the structure of the property, such as the roof, as well as permanent fixtures and fittings, such as baths and fitted kitchens, against a range of risks including fire, flood, storms and subsidence.
If you have a mortgage on your second home, the lender will insist that you have appropriate buildings insurance in place. But even if you own the home outright, it would be unwise to ignore buildings insurance. After all, could you afford to rebuild the property if it were destroyed by a fire?
How much buildings insurance do I need for my holiday home?
The buildings insurance policy should cover the cost of rebuilding your home, including any outbuildings and swimming pools - and the rebuild value is not the same as the market value. If you have recently taken out a mortgage, the valuation should give a rebuild figure. Or you can appoint a surveyor from the Royal Institute of Chartered Surveyors (RICS) to assess your home.
Many insurers also offer online calculators to determine the rebuild cost your home is overseas, the figure might be tricky to calculate so it might be a good idea to choose a policy that offers 'unlimited' cover, so you don't have to worry about working out the rebuild cost.
Some policies index link the rebuild cost so that it keeps pace with inflation. If your policy is not index linked, you should make sure the figure is regularly updated or you could be left with an insurance shortfall.
Our guide to buildings insurance tells you all you need to know about choosing the right policy, including calculating the rebuild cost of your home.
Should I buy contents insurance for my second home?
Contents insurance is not compulsory, but it is essential to protect your belongings. You might not keep anything particularly valuable in your holiday home, but it's surprising how much it would cost to replace the contents. Try walking through each room and making an inventory of your possessions to calculate their worth. Don't forget the bbq and any garden furniture. The inventory will also be a useful checklist if you let the property.
Try not to leave personal or valuable items in your holiday home if it is unoccupied or if you are letting it out. You are asking for trouble if expensive iPods and laptops are on display. Your insurer might impose a limit on the value of any one item, and even exclude some valuables if they are left in the house when it is let or empty.
Our guide to contents insurance explains how standard cover works - and highlights some of the main exclusions.
What does holiday home insurance cover?
Insurance for holiday homes should cover all the risks on a standard policy, but it will also include any periods when the home is unoccupied or let to family, friends or other tenants.
Most companies cover properties outside the UK, but you should always check that the country is listed if your home is overseas. Cover might be restricted in some areas. For example, a number of insurers will not cover earthquakes in Greece or Italy. Subsidence might also be excluded in some countries.
If your second home is a static caravan, you should check the details of the policy. Most insurers will cover static caravans, but some countries may be excluded.
Do I need additional holiday home cover?
Cover for second homes varies from insurer to insurer. For example, some firms include accidental damage for you and your family, but not for any tenants. So it's important to read the policy wording and to compare like for like when you are shopping around.
The following extras might be included in your policy. If not, it might be worth paying a higher premium for more extensive cover.
- Accidental damage: If you plan to let out your property, accidental damage can be useful. After all, guests are not always as careful as the owners!
- Home emergency cover: Some insurers give you - and your guests - access to a 24-hour emergency helpline if you need assistance in a domestic emergency, such as a burst pipe.
- Loss of income: If you cannot let out your property because it is damaged, perhaps by a fire or a flood, it can be comforting to know that your insurance will cover your loss of income. Most firms, however, will only cover the loss of any pre-booked income.
- Alternative accommodation: Your insurer will cover the cost of placing your guests in alternative accommodation if your property is uninhabitable due to unforeseen circumstances.
- Public liability insurance: It's a good idea to take out insurance to cover you for the death or injury to a third party on your property.
- Personal possessions cover: Insurance can often be extended to include items that you take out of the home, such as laptops and mobile phones. But you should also check the details of the contents insurance for your main home, as you might already be covered.
As with all types of insurance, it is important to read the small print carefully to check for any exclusions. If you are letting your property, for example, you must comply with certain rules and regulations, particularly health and safety laws, or your insurance will be invalid. And many insurers insist that you drain the heating system when the property is left unoccupied.
Tips for cheaper holiday home insurance
- Shop around for competitive quotes. But remember that the cheapest policy is not always the best.
- Make sure the home is fitted with approved security devices, such as alarms and window locks.
- All policies include an excess, which is the amount you must pay towards any claim. If you are happy to pay a higher excess, you should be rewarded with a lower premium.
- Maintain your home so that it does not fall into disrepair. Also insulate any pipes and tanks to prevent freezing in cold weather.
- If you buy buildings and contents cover from the same insurer, it might be cheaper than separate policies from different firms.
- Some insurers allow you to pay your premium monthly to spread the cost. Monthly payments are convenient, but they usually work out more expensive. So try to pay up front if you can.