Whether you own a second home as a holiday retreat, a base for work or an investment, getting the right home insurance cover for it is just as vital as the cover you put in place for your main property.
Indeed, if the property is empty for lengthy periods, as many second homes can be, it’s arguably even more important as you won’t be there to look after it and prevent the sorts of issues occurring that go hand in hand with home ownership. And if you let it out you’ll need insurance which covers you for anyone using the property injuring themselves or inflicting damage on it.
All in all, although owning a second home can be a route to extra riches or a better lifestyle, it needs careful planning and thought. You should most certainly consider the financial protection that the right type of second home insurance brings.
A word of warning: what you shouldn’t do
Whatever your reason for owning a second home, what you shouldn’t do is simply take out standard household cover for it.
As you aren’t living permanently in the property (and somebody else might be, if you’re renting it out or using it for holiday lets), the terms and conditions governing second home insurance are more complicated.
The insurance you need will be that bit more specialist and if you don’t tell the insurer the cover is for a second home, or the purposes you use the home for, your insurance could be invalid. So if you make a claim, your insurer is highly unlikely to make a pay-out once they discover that it’s not your main residence and what you’re actually using it for.
What makes somewhere your ‘main residence’?
From council tax to capital gains tax, inheritance and income, second homes are treated differently from a legal perspective to your main home.
But what is the difference between the two? What makes a home your sole or main residence? Although a person doesn’t necessarily need to be actually physically present at a property’s address at all times for it to be their main residence, there are a number of elements that are taken into account when deciding what is and isn’t your ‘main’ residence. The main aspects include:
- Whether you live at a property for most of the time
- Your legal ties to an address
- Where most of your possessions are kept
- Where your family spends most of their time
What are the other common types of residence and the insurance available for them?
Second home insurance is available to cover the four main reasons people commonly have for owning properties which aren’t their main residences; rentals, holiday lettings, holiday homes, second homes.
Rental property Insurance
There are a great number of reasons someone might own a property which they rent out on a permanent basis. Some of the most common include:
- Moving in with a partner – If both people in a relationship own their homes, when they move in together in one of the properties they might decide to rent the other one out rather than sell it.
- Inherited property – If a property is left to an individual, or jointly with other siblings, for example, they might decide to rent it out either until they’ve sorted out the deceased’s estate or until such times as they make a decision as to what to do with it.
- Buy-to-let – Over the last 30 years, many more ‘amateur’ landlords have bought property’s to rent out and, hopefully, eventually pay off a home loan to do so. Or they’ve bought for cash and it forms another revenue stream.
What do you need to check?
The types of home insurance available to landlords differs as much as standard home cover for main residences. However, along with the standard features common to most types of home insurance, there are certain key additional elements you should look for in a policy when comparing landlord insurance deals:
- Loss of rent – Most landlord’s biggest nightmare is tenants withholding, or being unable to pay rent.
- Legal cover – It’s common for landlord’s to become embroiled in disputes with tenants.
- Landlord contents – Landlords might want to ensure the items in a property that they own, such as white goods and and carpets, are covered.
- Accidental damage – Tenants are notorious for not treating the home they rent as well as they would if they owned it themselves. So having accidental damage included in a policy can be a good idea.
- Alternative accommodation – If your rental property is made uninhabitable in some way, it can be your responsibility to find the tenants a temporary alternative, place to live.
- Lock replacement – Tenants can be careless with keys and you might need to replace the locks. Likewise if you get in to a dispute, you may want to change the locks once the tenants are gone.
- Glass replacement – Windows, glass doors and other glass features are damaged more often in rented properties than owner-occupied homes and can be expensive to replace.
- Buildings cover only – For the cheapest option, you would have nothing but cover for the building itself included in your home insurance.
Holiday home Insurance
Holiday homes make up a large chunk of the second home ownership market in the UK, especially in coastal areas.
A second home might be considered to be a ‘holiday’ home if:
- The property is not your main residence and it’s in another part of the UK.
- You use it infrequently (or at least aren’t there for as long as you are your main home)
- It’s used by you and your family and friends only. In other words, no one ever pays you money to use it.
- It has no commercial purpose.
What do you need to check?
When it comes to finding cover for a holiday home, you can approach it in a fairly similar way to how you would when considering cover for your main home.
As it’s not being let for short periods, or rented out for fixed terms of 6 or more months, your needs won’t be much, if any, different in terms of what the cover should contain. A good standard home insurance deal should do it; pick and choose your policy depending on how much you want to spend and the level and sophistication of cover you decide is necessary for your holiday home.
However, you should be aware of the following:
- Tell your insurer it’s a holiday home – It’s crucial that you make your insurer aware that the insurance isn’t for your main residence, as the fact you don’t live there permanently will affect how they categorise it as a ‘risk’ and fix your premiums accordingly.
- Occupancy –If you know that it’s likely you won’t visit the home for 30 or more consecutive days, you need to tell your insurer as they will want to adjust your policy terms compared to their standard policies. They may increase the limit to 3 months or even more, for which you’re likely to have to pay extra, although some insurers will be unable to cover you at all and you’ll have to go to another provider.
- Letting friends use the property – Unless you have stipulated the names of individuals who are going to use the property, and especially if they’re not immediate family, the insurance won’t cover you for anything going wrong that involves them while they’re there. You would either need holiday let insurance, or to have the insurer agree to add the individuals to your policy.
Holiday Let Insurance
Holiday homes are commonly let for short periods of time, perhaps a couple of weeks or only a few nights. The home might be let like this for the whole year or just the summer, and the owners might still use it as a holiday home at other times of the year.
A home might constitute a ‘holiday let’ if:
- The property is not your main residence and is in another part of the UK.
- You rent it to others for short periods for the purpose of holiday lettings.
- It’s used infrequently by you (or at least less frequently than your main residence) and it’s let out to others.
What do you need to check?
Holiday lets are commercial operations and need more specialist cover than for standard property usage. There are the extra risks involved with third parties using the property, for example, and you have to consider the legal implications and potential for litigation if things go wrong.
You must tell your current insurer if you intend to start letting out your second home, even if it’s just for as little as a few days a year as they met not offer cover for holiday lets.
For a property you’ve just bought which you’re going to let out, you will need specialist cover.
There are a number of key elements and issues you should look out for in home insurance deals for holiday lets, including:
- Legal insurance – Disputes over holiday lets are common. This might be over terms of payment, litigation due to injury occurring at your property or damage to customer possessions. Whatever the reason, the legal costs of engaging solicitors and seeking expert advice and representation can be huge.
- Personal injury – If a customer injures themselves in your holiday let, they might decide it’s your fault due to the nature of the property and sue you for compensation.
- Employer’s liability – Quite often, people who let out holiday homes use the services of local people for such things as cleaning, changing sheets and showing people in and out at the start of a letting. If that ‘employee’ were to injure themselves, or come into dispute with you, and seek compensation, employers liability insurance would be necessary.
- Accidental damage – It goes without saying that you’ll want to include accidental damage cover as part of your holiday let insurance policy.
- Home emergency cover – If there’s an emergency in the property, such as a major water leak, collapsed ceiling or boiler breakdown, and you don’t live nearby, it could be a nightmare to get it sorted without the immediate assistance home emergency cover can bring, especially if customers are staying there at the time.
- Maintenance – You need to make sure the property is well maintained. Try and have vital parts such as the boiler, heating system and electrics serviced regularly. If you don’t, and something goes wrong, the insurer might put it down to poor maintenance and reject any claim you make.
Second home Insurance
A home is considered to be your ‘second’ property if it’s not your main residence. Reasons for having a second home include:
- Properties which could be considered someone’s second home are common among those who work in one place, but for whatever reason have decided not to live close enough to commute.
- Or it may be that someone has married more than once and has family commitments in different parts of the country or world even.
- The property isn’t the home where your family live or your main residence.
What do you need to check?
The home insurance you need for a second home is almost identical to that which is required for your main residence. You will probably want both contents and buildings cover, and the claim limits, scope and sophistication of a policy depends on how much you’re willing to pay.
However, key points to consider which do usually differ from your main home’s insurance may include:
- Occupancy – If you know, or think, that the property may go unoccupied for a good number of consecutive days (usually more than 30), you need to tell your insurer as they will have to adjust your policy accordingly. The occupancy requirement will have to be changed, if the insurer can allow this, and you may have to pay more for this.
- Friends and family usage – If you let friends and non-immediate family members use the home, especially when you’re not there, unless you’ve already named them on your policy, you won’t be covered during the time they’re at the property. You would need landlords insurance to ensure cover was adequate.
- Lodgers/permanent guests – Many second home owners like to have someone using the property while they’re not there to deter would be thieves and to keep and general eye on the place. However, if this is the case you need to tell your insurer. If you’re renting a room to a lodger, you may need to take out a landlord’s insurance policy of some kind.