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The demand for holiday lets is surging and there has never been a better time to maximise the value of your holiday home investment by renting it out to paying guests.

Self-catering holiday bookings soar

  • Bookings were up 223 per cent in June 2020 compared to the same period last year at Hoseasons. The demand for a staycation post lockdown has outstripped supply.
  • Holiday lets in tourist hotspots are already booked up for Easter, May half-term and summer 2021 due to the ongoing uncertainty around foreign holidays.
  • Rental prices are expected to increase next year by 20 per cent as operators try to recoup some of their lockdown losses.

However, holiday let landlords are leaving themselves exposed by not having suitable insurance for holiday letting and underestimating the unforeseen that could ruin both their property and the guests' holiday.

It is essential that your property is adequately insured. So, before you get started letting your holiday home, here's everything you need to know about insuring it.

What is holiday let insurance

Holiday let insurance is specialist insurance that covers holiday homes that are let to paying guests as well as friends and family on a short-term basis. Policies typically cover public liability, accidental damage, loss of rent as well as periods when the property is unoccupied.

A standard home insurance policy is not sufficient to cover your holiday let as it will not cover commercially letting your home - which will probably invalidate the policy.


What does holiday let insurance cover?

Much like a standard home insurance policy, insurance for holiday lets typically covers your property and belongings for loss or damage due to events like theft, flood, storm, escape of water, subsidence or fire.

The cover is split into two elements: buildings insurance (covers repairing or rebuilding the structure) and contents insurance (which covers damaged or stolen items within the property). These can either be bought separately or combined into one policy.

As a general rule, if it's something you'd take with you if you moved to a new home, it's classed as contents. If it would stay behind, it's buildings.

Buildings Insurance

Buildings insurance covers the main structure of your holiday let and its permanent fixtures and fittings, such as the roof, walls, floors, ceilings, fitted kitchen or bathrooms if they are damaged. Garages, outbuildings and sheds should be covered too.

Key Points

  • General wear and tear and routine maintenance isn't covered.
  • Make sure the sum insured is enough to cover the cost of rebuilding your holiday let including any outbuildings, swimming pools, tennis courts or hot tubs. The costs for debris removal and professional architect and engineers fees should also be included.
  • Failure to insure for the full reinstatement value could result in the claims settlement being reduced

Contents Insurance

Contents insurance covers your personal belongings such as furniture, kitchen appliances, electricals, soft furnishings and carpets if they're damaged, lost or stolen.

When it comes to insuring your contents, think about how much it would cost to replace all the items in each room.

Key Points

  • Valuables or guests possessions aren't typically covered.
  • Breakdown of household appliances isn't covered.
  • Single items are only covered up to a certain amount.
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Specialist holiday letting insurance

Cover can vary between providers, however, specialist holiday rental insurance policies include specific cover that protects your property from the various risks associated with renting out your holiday home.

Such as:

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Policy add-ons

For an additional cost, you can add optional extras to tailor your insurance policy if you need them.

Accidental damage

Covers damage to your property and its belongings against everyday mishaps from guests who may not be as careful as you. For example, spilling red wine on your carpet or a smashed window. Cover can vary so check if damage by pets or malicious damage is covered.

Legal expenses

This covers legal expenses (up to a limit) where a solicitor's advice is needed. For example, eviction of overstaying guests, property disputes and tax protection.

How to reduce your insurance premium

Shopping around for quotes isn't the only way to save. Here are some tips that could help you save some money on your insurance premium.

  1. Pay annually
    It's often cheaper to pay the premium annually in one lump sum rather than paying monthly as most insurers will charge interest or an admin fee if you opt to pay monthly.
  2. Buy a combined policy
    Buying buildings and contents insurance from the same insurer will often save you money compared to buying each separately. Plus, there's often only one excess to pay and reporting to one insurer can make claims simpler.
  3. Increase your excess
    Opting to pay a higher voluntary excess can lower your insurance premium.
  4. Improve the security
    Because holiday rentals are generally empty more often than main residences, they are more likely to be broken into. Installing insurer-approved locks on your doors and windows and adding extra security such as a burglar alarm can reduce the price of your insurance.
  5. Check for admin costs
    Look out for extra charges to amend your policy. A more expensive policy could work out cheaper when admin fees are factored in.
  6. Don't over-insure
    Overestimating the rebuild cost of your property and the value of your contents will increase your premium, so ensure the figures are accurate.
  7. Build your no claims discount
    Most insurers offer a discount on your premium if you've gone several years without a claim.

What factors affect your insurance quote?

Your premium is based on several factors relating to you, your home, the value of your items and the risk of loss and damage. The greater the risk, the higher your insurance quote is likely to be.

  • The location If there is a high crime rate or if the area is exposed to severe weather conditions or subsidence resulting in more insurance claims.
  • Size of your home If you own a large property in a tourist hotspot, the cost to have it rebuilt is likely to increase the quote.
  • Flood risk Homes near rivers, streams, canals, waterways or the sea are generally more expensive to insure due to a higher risk of flooding.
  • Age and property structureThe age of your property and materials used to build it can impact your premium. For example, buildings made from non-standard materials and listed buildings.
  • Your lifestyle If you're away from your holiday property for long periods or if you have any or a pending criminal conviction.
  • Value of your contents The more expensive your belongings are, the more it will cost you to replace them and get them insured.
  • Previous claims Your claims history is taken into consideration.

What details do you need to get a quote

It's useful to have the following information to hand:

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  • Property details: Address, property type, number of bedrooms, the year it was built, how it's heated and a few structural details e.g. what your exterior walls are made of, type of roof and how much flat roof space you have.
  • About your cover: Do you need buildings insurance, contents only or buildings and contents, and when do you need the cover to start?
  • About you: Your contact details, correspondence address and occupation.
  • Claims: Any claims you have made in the last five years and if the property has ever suffered from flooding or movement caused by subsidence, heave or landslip.
  • Rebuild cost: The amount it would take to rebuild the property if it were destroyed.
  • Value of your contents: The cost of replacing the entire contents of your home as new.
  • Security details: What window and door locks you have and if you've got a burglar alarm.

Holiday let landlord insurance FAQ's

Why do I need holiday let insurance and not standard home insurance?

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.

Is holiday letting insurance mandatory?

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.

How much does holiday let insurance cost?

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.

How much insurance do I need for my holiday let?

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.

What should I check when comparing insurance policies?

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?
What cover do I need if I'm renting out my main home to paying guests?

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.

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Why choose us?

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References
* One in four UK households have no contents insurance protection
** The average value of possessions insured on holiday home contents insurance policies purchased via Schofields between 1 April - 31 August 2020 was £19,500.
*** Customers rate our service at 99% positive based on 1708 independent Feefo customer reviews. September 20.