Choosing the Right Cover for a Holiday Let or Cottage
Holiday home insurance is essential to protect one of your biggest assets, but with the average price of home insurance rising by 40% in the last 12 months, shopping around for the best policy is vital.
When it comes to shopping around for holiday home insurance cover, many owners make the mistake of focusing on the price, but the level of cover is just as important as the price. Choosing the cheapest policy is a false economy if the policy provides inadequate cover.
In this guide, we’ll share our top tips on how to compare holiday home insurance so you get the best cover.
Are you eligible?
Before you spend time scrutinising an insurance policy or filling out quotation forms, check that you are eligible for the insurance first. Insurers can refuse to offer cover for many reasons, for example: certain types of properties (thatch), properties permanently unoccupied, holiday homes in certain risky areas (flood prone) or non-UK residents. The eligibility criteria is usually at the beginning of the quote process. If in doubt, speak to the insurer so you don’t waste your time.
Don’t just let your existing policy auto-renew
Insurance renewals are typically issued 28 days before the renewal date. Your insurer may have not only increased the premium at renewal but updated their policy wording too. Always make sure that you check the renewal terms thoroughly and that you are happy with any changes to the cover before the policy auto-renews.
You may also need to tweak your cover before renewing if you have made any upgrades to your property.
Write down a list of the essential cover you require
If you’ve got an existing policy, make a note of the cover you’ve got. When you are comparing policies, use this list to check if the policy provides the cover and note any exclusions or limitations. If you are taking out a policy for the first time you should understand what type of cover you need. If you are unsure, these guides to insuring a holiday home or holiday let should help.
Get quotes from different insurance companies
Everyone likes a deal, but don't choose an insurance policy because it’s cheap. Cutting corners could prove to be a false economy as cheaper policies often cover less and have more exclusions.
When you are comparing quotes make sure you are comparing policies that are like-for-like and the cover is the same. Prioritise value for money based on the comprehensive cover you’re getting, and good service so you won't regret it if you find yourself having to claim on your policy.
When shopping around you can often reduce the premium by improving your holiday home security, opting for a combined buildings and contents policy and paying annually rather than monthly.
Insurance comparison websites
Comparison sites can be useful for getting several quotes in one place, however, comparison sites have been accused of ordering policies based on the cheapest or based on commercial agreements rather than the most comprehensive cover. Again, to get a fair comparison it's important to consider the policy benefits, compare like-for-like and check any excesses that apply to each policy.
Holiday home insurance is a specialist niche product and not all insurers are on comparison sites, so also get quotes from insurers not listed on them.
Pay careful attention to exclusions and policy endorsements
Insurance doesn’t cover all eventualities - that’s a fact. There are exclusions in the small print of all insurance policies that you need to check. Nobody enjoys reading insurance policy documents but it’s important that you familiarise yourself with any exclusions, policy endorsements and limits on what is and isn’t covered that apply to your policy.
Damage caused by the escape of water
Our experience is that water damage, primarily by burst pipes, is one of the most common and costly holiday home insurance claims. Therefore, policies typically exclude loss or damage caused by the escape of water whilst a holiday home is unoccupied unless you comply with specific policy conditions.
Most insurers require that the water is turned off at the mains, all equipment is drained, or the property is heated to a minimum temperature between November and March.
As your holiday home is likely to be left unoccupied, it’s essential you check what unoccupancy clauses and winter warranties apply. Failure to comply with these could mean your claim is ruled invalid, leaving you financially responsible for the loss or damage.
Unoccupancy restrictions
Check to see if your insurer limits cover when your holiday home is unoccupied. Usually, restrictions apply when properties are empty for more than a specified number of days e.g. 7 or 30 consecutive days. Some policies also require holiday homes to be inspected weekly.
Theft cover
Another area to check is what theft cover is included. It is common for insurers to only cover theft if there are signs of forced entry, so entry through an open window or using a key would not be covered. Theft by guests is also often excluded.
What are the security requirements?
Many holiday cottages are located in rural areas – this isolation combined with infrequent use makes them attractive to thieves who target holiday properties equipped to a high standard. Therefore, some insurers will require specific security measures such as fitting specific locks to doors and windows or installing an alarm.
What level of public liability insurance is included?
If a member of the public or guest is injured on your property you could be held responsible. Injury claims can be hugely expensive; medical bills, legal fees, loss of potential earnings and compensation claims can run to many thousands of pounds. Check that the public liability covers holidaymakers renting your property and friends, as cover on some policies is restricted to family members only.
Check that the public liability insurance also covers the use of your swimming pool or hot tub if you have them.
If you employ staff, e.g. a cleaner or a gardener at your holiday home it is a legal requirement that you have employer’s liability insurance. Is it included?
Temporary accommodation and loss of rent
If you are holiday letting your property and it becomes uninhabitable due to flooding, for example, some policies only cover the costs of alternative accommodation incurred by the policyholder. Paying guests using the property are not covered.
Also, check what loss of rent cover is provided should you have to cancel bookings following a loss or damage.
What are the optional extras?
With some insurance policies, you can add extra cover that isn’t included in the standard policy. If you let your holiday home and you're worried about accidental damage by guests to your holiday home, look for a policy that offers the option to include accidental damage to buildings and contents.
Some insurers only cover accidental damage when the property is used exclusively by the owner. There tends to be no accidental damage cover when the property is lent to friends or relatives and certainly not when let out commercially to holidaymakers. You’ll also need to check that malicious damage by guests and damage by pets is covered if you are a dog-friendly holiday rental, as most policies exclude this.
Legal expenses insurance is also offered as an add-on. This typically covers disputes such as evicting a holidaymaker who refuses to leave.
Not opting for add-ons will lower your insurance premium but will also give you less cover that could cost you if you need to make a claim and you don’t have the cover.
What is the insurance excess?
If you need to make a claim, an amount will be deducted from the settlement, this is known as the excess. It’s important to check how much the excess is for different types of claims as they vary between insurers. For example, a policy may have a £100 standard excess, but a £500 excess for an escape of water claim, or £1,000 excess for subsidence.
With most insurance, you can opt for a higher voluntary excess to lower the premium.
Are there extra fees?
Many insurance policies allow you to amend your cover mid-term, but there’s usually an admin fee. Some insurers will also charge you if a policy is cancelled outside the cooling-off period. If you want to pay monthly, some insurers will charge for this. Therefore you’ll need to factor in any additional charges when comparing different insurance policies – not just the premium quoted.
Read online reviews
The cover and price aren’t the only considerations when buying holiday home insurance. Your insurer should also be helpful and responsive when you have a claim. To evaluate a company's customer service, read online reviews from customers.
Common mistakes when comparing insurance and getting quotes
Insurance premiums are calculated based on risk. If you’ve had multiple claims, or your property is near a river you could find your premium increasing as you are more likely to have a claim within the policy term. If this is the case, you should always be honest and accurate with the information you provide when getting a quote. Purposefully withholding or misrepresenting the facts could result in claims not being paid or your policy being voided.
Under-insurance is a also big problem. Accidentally underinsuring or intentionally reducing your buildings or contents sum insured to reduce the premium can have significant consequences. You should insure for the full replacement value. If for example it was discovered that following a claim you were underinsured by 33%, then 33% would be deducted from your claim.
Insurance covers the unforeseen and a claim could happen at any time. It's better to forego the small savings you would make by reducing your cover, or misrepresenting the risk to ensure your holiday home is adequately insured.
Know your rights
Insurers have a duty to provide cover that meets your needs as well as treating you fairly. If you decide that the insurance cover isn’t suitable after taking out the policy, you have a right to cancel within 14 days. You can then obtain a more suitable policy. If your insurer is regulated by the FCA, you also have a right to complain to the Financial Ombudsman if you’re unhappy with your insurer, for example, a claims complaint.
To summarise
When comparing holiday home insurance from different providers, make a list of what is and isn't covered by each policy, check the excesses, and then make a like-for-like price comparison to find the perfect combination of protection and affordability.
With forty years experience insuring holiday homes and holiday lets, Schofields is highly experienced. We pride ourselves on offering comprehensive cover when your holiday home is left unoccupied or holiday let. If you have any holiday home insurance queries, please get in touch and a member of our friendly team will be happy to help you.
