Holiday home insurance

Do I need special insurance for a holiday let?

While holiday home insurance is not a legal requirement, like standard home insurance it is highly recommended. 

It can protect both you and your guests from damage, as well as the building structure and any items you store within it. 

'Normal' policies are mainly designed to cover the home you live in. Properties that are rented out to guests or that go unoccupied for lengthy stretches of the year are far less likely to be covered in full, as standard. This means it may be necessary to purchase specialist cover. 

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How is insuring a holiday home different from insuring my permanent home?

You won't be living in your holiday home full-time and therefore the risks involved in the property are different:

• If a leak occurs or an electric fault sparks up it may take longer to be discovered, and therefore the damage caused could be significantly higher.
• Empty houses are easier to break into.
• Paying guests may cause damage to your property or injure themselves.

The insurer will consider this when offering you a policy, and it will need to know all the ways you use your additional property. 

• Find out more: Best home insurance 2024 

Types of holiday home insurance

Holiday home insurance 

Like standard home insurance, holiday home cover levels vary by provider. But a good policy should cover you against events such as fire, storm, flood, escape of water, theft and malicious damage. Some will also cover accidental damage caused by guests. 

Unoccupied home insurance

Most normal home insurance policies have 'unoccupancy periods' of between 30-60 days. This is the number of consecutive days you can leave your home empty while retaining full insurance cover. 

If your home is likely to be empty for longer (for example if you're on an extended holiday, rent it out and its between tenants, or it's up for sale) you may need to get unoccupied property insurance to protect it. 

As with all other forms of cover, the levels of protection vary between policies. Some may cover you against malicious damage, storm damage, theft and escape of water (e.g. leaking pipes) - whereas the most basic policies may just protect against fire.    

Holiday let or host insurance 

This is additional insurance that will cover homeowners who let out their property to paying visitors. 

It should be taken out in addition to standard home insurance. 

What does insurance for holiday homes cover? 

Similar to your home insurance, your holiday home cover will protect your home with standard and optional elements of cover. These can include: 

• Standard buildings insurance and contents insurance Cover for the building and your possessions inside it.
• Accidental damage cover Unanticipated damage caused by you or your guests.
• Emergency travel If you need to travel to your holiday home to fix a leaky dishwasher or burst pipe. 
• Loss of income If you are losing money from your holiday let due to damage or repairs.
• Liability insurance Covers the cost if someone takes you to court because they have been harmed in your home. You'll also need this if you employ any staff.

It may not cover stag or hen parties; if the let is for an extended period of time; or if you have more than a certain number of bedrooms. 

If you are planning to use your holiday home for these reasons, check with the insurance provider before taking out a policy. 

• Find out more: Is flooding covered by my home insurance?

Will my home insurance cover me if I'm renting out a room on Airbnb?

Home insurance cover is unlikely to allow you to use your home for commercial gain or business purposes without this being specifically declared and agreed to when buying the insurance.

Let your insurance provider know your plans of renting out a room and see what they can do for you. 

They may offer you additional standard cover or recommend you take out host insurance. If you are not honest with them, they could invalidate your insurance and put you on the fraud register. 

A number of policies offer host insurance as a standard add-on, and you'll just need to request it. This will increase your monthly premiums but will save you in the long run if a guest damages themselves or your home. 

AirCover

Airbnb does offer its own AirCover insurance when you apply to be a host. 

But Airbnb stipulates that this is not a substitute for having your own insurance and what it offers is not an insurance policy contract. If something were to go wrong, you could not go to the Financial Ombudsman Service for support. 

• Find out more: Home insurance: add-ons, fees and charges explained 

Do UK insurers cover overseas holiday homes?

Yes, UK insurers commonly offer coverage for holiday homes abroad, including buildings and contents insurance similar to UK residential properties. 

This means you can secure comprehensive coverage without needing insurance from the country where your holiday home is located. Popular European destinations such as France, Spain, Portugal, and Italy are often covered by UK insurers.

Choosing insurance from UK providers has its benefits. You'll communicate with English-speaking staff and have all your paperwork in English, making the claims process easier, especially if you're not fluent in the local language.

Coverage may vary depending on factors such as the risk of natural disasters in the area. However, UK insurers aim to cater to the needs of individuals seeking to protect their holiday homes abroad, ensuring peace of mind for property owners regardless of their location.

• Find out more: Overseas mortgages explained

How much does it cost to insure a holiday home? 

The cost of holiday home insurance will vary from property to property. Your insurance provider will take several factors into consideration, such as size, location, how often it's occupied and the value of the property and contents within it. 

When considering how much you want to charge for your holiday rental to guests, it's important to take into account running costs, a mortgage if you have one and your insurance premiums.

If your fully furnished home qualifies with HMRC as a holiday let (available for commercial lets at least 210 days a year, among other conditions) your holiday home insurance will be an expense that is tax-deductible. 

What else do I need to consider before renting out my home?

It's not just insurance you need to think about when renting out a room or entire property:

• Your landlord Breaching your lease could result in penalties, so check the terms and conditions.
• Your mortgage provider While short-stay lodgers are generally allowed, check before you rent our your entire home. You may be asked to move onto a buy-to-let mortgage.
• Building rules If you live in a block of flats it's possible there are rules on renting our your property.
• Tax Income tax will apply to any money you make, though the Rent a Room Scheme allows you to earn up to £7,500 a year tax-free (and avoid filling in a tax return) if you're also resident in the property.