All you need to know about insurance for holiday lets

A standard home insurance policy is not sufficient for holiday lets as most insurers exclude properties left unoccupied for long periods. This increases the risk of theft, damage, squatters and incidents such as water leaks that can go unnoticed - causing major damage. There's a further risk of theft, accidents or damages when let.

Most insurance providers are not prepared to cover holiday lets as they perceive them to be too great a risk. What you need is a specialist holiday letting insurance policy.

Holiday let insurance isn't compulsory, but if you have a mortgage then most lenders will insist you have building insurance as a minimum to protect their investment. But even if you own your holiday home outright, it's a good idea to have protection in place should the worst happen.

Again, contents insurance isn't compulsory and according to the ABI 1 in 4 UK households have no contents insurance protection*. But could you afford to replace everything in your holiday let if stolen or damaged?

If you employ people at your holiday let it is a legal requirement to have employers' liability insurance. It's usually an integral part of a holiday letting policy.

Insurers use a whole host of factors to calculate your premium - property location, the property type, security, risk of flooding or subsidence, how extensive your cover is and how likely the insurer thinks you are to claim.

For buildings insurance the premium is based on the rebuild value and contents insurance is based on how much it would cost to replace your belongings. There may also be an additional cost to add extra cover e.g. accidental damage and legal expenses insurance.

When comparing quotes and cover you want the best insurance for your holiday let, not the cheapest.

The amount of buildings insurance you take out should represent how much it would cost to rebuild your holiday home (including any outbuildings) in their present form, not the market value. To obtain your rebuild value either refer to your purchase survey or ask a qualified surveyor to provide an insurance valuation. Find out more

Your contents insurance amount should be based on what it would cost to replace your contents (anything you could reasonably remove and take if you moved house) if you were replacing them at today's prices. Typically, the average value of possessions in a holiday home is around £20,000. ** Find out more

It's important to calculate these values accurately because over-estimating could mean you pay too much for your insurance, while being underinsured could mean you receive a lower pay-out if you claim.

Choose a policy that provides £5 million of public liability insurance as compensation claims and legal costs can be significant.

Legal expenses insurance with a cover limit of £25,000 may be sufficient.

Unfortunately, insurance doesn't cover every eventuality. You should make sure you read your policy document in full before purchasing so you know what will and won't be covered.

While you want to keep costs down, you also need the best cover possible. You must ensure you have the right cover so that ultimately - your claim gets paid.

Key points:

• If you have a swimming pool or hot tub check you are covered for accidents and injury to guests using them.
• If your holiday rental is 'pet-friendly' ensure you are covered as very few insurers will cover damage caused by pets.
• You can't guarantee that guests will lock external doors and windows at night or when they go out, so ensure your insurance covers theft by 'non-forcible entry'.
• If you use a Keysafe to store keys for holidaymakers, check any if endorsements apply.
• Check for any security measures required, such as specific locks. Failing to implement the required security is likely to invalidate theft claims.
• Is theft by paying guests covered? Most insurers exclude it as standard.
• It's the holidaymakers responsibility to take out travel insurance to cover their possessions whilst at your rental.
• How much loss of rent is covered, it's usually a % of the sum insured or a specified amount.
• What unoccupancy clauses and winter warranties apply. Do you have to leave the heating on to maintain a minimum specified temperature or turn the water off and drain water tanks/pipes when no-one is occupying the property?

The home-sharing market has soared in popularity over recent years, but so have the horror stories of homes being trashed by unruly guests.

If you're looking for insurance while renting out your main home on a platform such as Airbnb, firstly inform your current home insurer as they may agree to extend the policy to cover short-term rentals. If you don't tell your insurer you are renting to paying guests, then your cover is most likely to be void.

Your other option is to seek out a specialist provider that includes public liability cover for people staying in your home, malicious/accidental damage and theft cover.

Note: Our holiday letting insurance is for holiday homes and second homes and is not suitable for renting out your main home.

A comprehensive holiday let insurance policy from Schofields offers comprehensive protection to safeguard against the common risks when letting out your holiday home and whilst the property is unoccupied.