Holiday Home Insurance: Everything You Need To Know

Holiday home insurance is like standard home insurance and protects your holiday rental property and its contents. We look at what holiday home insurance is, what is covered by holiday home insurance and what affects the cost.

Jeff Salway Published on 24 September 2021.
Holiday Home Insurance: Everything You Need To Know

One of the attractions of a holiday property is that it offers a break from your usual home. It’s a place where you can kick back and forget the hassles of day-to-day life, and which you can also rent out for some extra income.

In many ways, a holiday home is no different than any other, with all of the responsibilities that go with owning a property. However, there are some things you might have to pay more attention to, including your home insurance.

What is a holiday home?

A holiday home is typically a second home that people use for getaways. It’s often more than that, however. In some cases it’s also an investment that can provide you with rental income while you’re not using it. And for some, it’s a place that friends and family will use too.

What is holiday home insurance?

You would take out holiday home insurance for the same reason you would take out cover for the home you normally live in: to protect your home and possessions against the cost of damage, loss or theft after a covered event, such as a fire or flood, or a burglary.

Like most home insurance policies, it usually comprises buildings insurance and contents insurance. Buildings insurance covers the physical building structure and permanent fixtures and fittings, such as built-in kitchen units.

Contents insurance is for furnishings, such as beds, sofas and appliances, and covers the cost of replacing or repairing them if they’re damaged or stolen.

There are differences, though, which take account of things such as when your holiday home is unoccupied, and risks associated with guests staying there. These factors can increase risk. For example, a flooded bathroom caused by a fault in your plumbing may go unnoticed for a period of time, and an empty house may also be at greater risk of break-ins.

» MORE: Content insurance explained

Do I need holiday home insurance?

Holiday home insurance isn’t a legal obligation. However, mortgage providers will typically require you to have buildings cover in place before they lend you any money.

Also, the cost of not having buildings and contents insurance can be high, considering how expensive repairs and replacements can be.

What does holiday home insurance cover?

Holiday home insurance policies offer largely the same buildings and contents cover as standard home insurance. But there are important differences.

Holiday home insurance will usually protect homes that lie empty for 30 consecutive days or more, as well as providing cover for others that stay there, such as friends, family and paying guests. This is normally not the case with regular home insurance.

If your holiday home lies empty for long periods, there is more risk of damage such as leaking water pipes, which become worse if not spotted early on. It will likely be more vulnerable to burglary and vandalism too.

Typically, insurance providers will offer a standard package covering the building itself, along with fixtures and fittings cover, public liability and other specific coverage, such as alternative accommodation cover.

However, you may opt for optional extras to be covered too. For example, loss of rent in the event of damage to your property may be an option with some providers.

» MORE: What you need to know about emergency cover

What doesn't holiday home insurance cover?

It is important to compare policies in this market because the amount of cover can vary between providers.

Some policies will have a maximum period the property can be empty, beyond which the cover is invalidated. In some cases it is 30 days, while in others it can be much longer.

You may also have to visit regularly and take measures in the winter, such as keeping the heating on for a time or draining the heating and water system, as part of the policy conditions.

Providers sometimes stipulate that they won’t insure holiday properties that are used as ‘party’ homes, such as for birthday, stag and hen parties. They may also insist that you have certain security measures in place – approved types of locks on doors and windows, for example.

How much holiday home cover do I need?

The approach here is the same as with any type of home insurance.

The buildings insurance part is based on the estimated cost of rebuilding the property from scratch, and not on how much the home is worth on the property market. It is worth paying for a qualified surveyor to give you a rebuilding cost estimate, unless you have a relatively recent estimate from previous assessments. You can also try an online calculator such as the one on the Association of British Insurers website.

Similarly, contents insurance is based on how much it would cost to replace the belongings you keep in your holiday home. Take an inventory or checklist of the items you keep there. Also consider keeping more expensive items in your main home if you can because single items worth more than a certain amount will increase your premiums.

It is important to be realistic about the replacement values because you may otherwise risk underinsuring yourself and being left out of pocket, or overinsuring yourself and paying higher premiums than you need.

» COMPARE: Compare different types of home insurance

What if I rent out my holiday home?

There are some extra features to look out for if you let out your holiday home to guests.

For example, public liability insurance offers protection for compensation claims made by a guest if they are accidentally injured on your property.

If the rental income you get from your holiday home is significant, you may also want loss of rental income to be included. This covers you if you have to cancel bookings due to damage to the property.

Similarly, some policies will have an alternative accommodation add-on that covers the cost of your guests staying somewhere else while the property is uninhabitable.

What if my holiday home is abroad?

Some UK insurers offer insurance for a holiday home overseas. But check the product documents, as some won’t cover properties in certain countries and apply restrictions in areas where extreme weather or earthquakes happen.

If you take out property insurance overseas but are not fluent in the language, ask if the policy documents are available in English. You may also want to check if the insurer can provide English-speaking customer service.

What affects the cost of holiday home insurance?

The amount you pay for holiday home insurance depends on a number of factors, including where your property is located, the amount of buildings and contents cover you need, and the add-ons you choose.

It is worth shopping around because premiums vary between providers and policies. There is nothing to stop you getting buildings insurance from one provider and contents insurance from another, if that works out best.

You may also have the option of choosing a higher voluntary excess. This will reduce your premium, but you’ll pay more towards each claim.

» MORE: Tips to get cheaper home insurance

Image source: Getty Images

About the author:

Jeff is a freelance journalist who writes across finance & business. He was the personal finance editor at The Scotsman & Scotland on Sunday & a member of the Financial Services Consumer Panel. Read more

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