Our Plain Language Guide to Holiday Let Insurance

When you’re letting your property to holidaymakers, insurance is a must. But it’s important to know ordinary home insurance won’t do the trick. There’s a big difference between everyday home insurance, which protects the place you actually live, and holiday let insurance, which protects the property that earns you money.

Here’s our plain English guide to the insurance you need for your holiday let. It’s essential when making the wrong choice means your insurer can turn claims down, leaving you in a difficult financial position.

Why are home insurance and holiday let insurance different?

They may sound similar, and they do have a lot of similarities, but the risks involved in holiday lets are different from the risks you face as a homeowner.

Insurance policy pricing and cover is based on the specific risks involved. Insurers use vast amounts of real-life data to analyse the likelihood of claims happening, set fair premiums, and make a small profit.

Bear in mind insurance for holiday lets tends to cost more than home insurance, reflecting the extra risks the insurers have calculated.

What’s the difference between home insurance and holiday let cover?

Most standard home insurance policies won’t cover holiday lets at all. Even if they don’t explicitly say ‘no’, the small print will include caveats to invalidate your claims. Basically if you buy the wrong cover, you’ve wasted your money.

Renting a property changes everything. Home insurance excludes claims that happen because you’re letting strangers stay in your property, while renting to guests is the whole point of a holiday let policy. When you’re charging people to stay there, insurers will always treat it like a business rather than a home.

Standard home insurance is designed for your home, where you live. If you choose buildings and contents cover it protects the building itself: the walls, roof, windows and fixed indoor fittings, plus your belongings: things like the furniture, your clothes, TV and so on. Basically if it’s fixed in place, it’s usually buildings insurance and if you can take it with you, it’s contents insurance. Specialist insurance includes cover for the buildings and contents, but there’s extra protection for the risks associated with running a rental property.

Ordinary home cover assumes you live in the property full-time, while insurance for holiday lets is specifically designed for renting out to short-term paying guests as a business, potentially left empty between bookings. Contents cover for holiday lets can differ as well. Matching like for like is a good example. If one piece of a sofa set has been damaged, the cover replaces the whole suite, not just the damaged part.

Obviously, leaving a property empty poses a major risk. Holiday lets can often sit empty for long periods, especially in winter. This puts them at increased risk of leaks, break-ins, theft, damage and problems you don’t notice because there’s nobody there to report and deal with them. That’s why home insurers will either reduce or cancel cover if a property is empty for longer than a certain amount of time each year, usually anything from 30-60 days depending on the policy. But when it’s a holiday let, empty periods between bookings are what’s expected, covered by specialist policies.

The same goes for damage caused by guests. Everyday home cover doesn’t include it. You can’t claim unless someone has broken in, or you’ve paid extra for costly accidental damage cover on your home contents policy. Insurance for holiday lets usually includes accidental damage caused by people renting the property for a holiday. If a guest spills wine on the carpet or breaks the furniture, for example, a specialist holiday let policy covers it.

Injury claims can be huge, especially if a guest hurts themselves badly while staying at your holiday let. Home insurance includes basic liability cover for normal visitors. Specialist holiday let insurance covers important things like legal defence costs, settlements and court-ordered judgments, protecting you against the expenses that can arise from accidents and negligence. Because the public liability cover element of the policy is much stronger, if a guest trips, gets injured, then sues you, or your housekeeper hurts themselves while working there, the pay-out limit is usually £2-4 million, designed to help cover your legal costs plus any compensation.

There’s more. Home insurance doesn’t give you any protection for lost rental income or profit, but specialist cover includes loss of income cover. So if a fire or flood forces you to cancel bookings, for example, you don’t lose all of your earnings. If you’re forced to close your property, cancel bookings and give the guests their money back because of an unforeseen major issue like structural damage or environmental issues like Foot & Mouth, you’d normally still have to pay Airbnb or your rental agency their commission. But the right insurance covers it.

So in a nutshell, home insurance assumes your home is just a home, not a business, but holiday let cover is specially designed for income-generating properties. It isn’t only protecting the building and its contents, it protects the business itself.

Holiday let cover in bullets

• Buildings insurance pays to repair the structure of the property and fixed fittings like kitchens and bathrooms
• Contents insurance pays for the furniture and other items inside that you can pick up and carry
• Public liability covers you if a guest is injured and claims against you
• Loss of rental income cover replaces the money you lose if guests can’t stay
• An unoccupied clause sets out how long a property can be empty before cover is limited
• Holiday let insurances are specially designed for short term rentals
• The policies cover guests staying, which isn’t included in home insurance
• Unlike home insurance it provides cover for empty properties
• Guest damage is covered, something that’s often excluded from ordinary home insurance
• You get enhanced cover for injury claims
• It’s built for business use, underwritten with specific business-related risks in mind

A list of UK holiday let insurance providers

We can’t recommend a specific holiday let insurer to you, but we’ve created this list of providers. They all explicitly support commercial short-term letting rather than personal use or occasional letting.

• Intasure provides specific holiday let policies for properties rented to paying guests, backed by Arthur J. Gallagher, one of the world’s biggest insurance brokers
• Schofields Insurance is a highly experienced specialist in holiday letting properties, underwritten through Lloyd’s of London, one of the world’s oldest and best-known insurers
• I4me is a handy holiday let insurance comparison broker
• Gallagher is a huge broker including specialist holiday let divisions. They have a dedicated holiday let team, provide specialist cover for short-term rental businesses and complexes, and also offer policies designed for large portfolios and high value properties
• The Bateman Group insurance brokers have access to a panel of insurers for properties including holiday lets
• Adelphi Insurance Brokers offers cover for commercially let properties
• Advent Insurance Services covers commercially let holiday properties, also offering a flexible service for unusual properties and mixed-use letting
• Voyager Insurance Services provides non-standard property insurance including cover for Airbnb-style letting, accessed by brokers rather than direct to the public. Your insurance broker might contact them for you
• The Bspoke Group focuses on leisure and hospitality properties, usually used for bigger or more complex holiday let businesses

Any questions?

If you have any questions about holiday let cover itself, please ask your lender, insurance broker or insurance company for expert advice. As far as anything else goes, we’re always delighted to answer your holiday cottage letting questions. Feel free to contact us.