What To Do When Guests Want A Refund

It’s every holiday let owner’s worst nightmare. You get the dreaded phone call that there has been a break at your holiday rental and some of the guest’s valuables have been stolen. (Note: if the guests have travel insurance, this should cover any personal items stolen: passports, money, credit cards, jewellery etc.)

After you help the guests report the theft to the police, get replacement passports etc. the holidaymakers decide to checkout because they feel unsafe staying in your holiday home.

Then they drop the bombshell, they expect you to refund their money so they can pay for a local hotel. Should you provide a refund, how much, or can you claim on your holiday let insurance?

Option one – no refund
It is likely that following a break in, your holiday home buildings insurer will instruct you to repair any damage to prevent further loss. If you rectify damage straight away and make your property safe, you and your insurer may have the opinion that there isn’t a reason for guests not to continue their holiday.

Although some guests will understand that the burglary was an unfortunate event and stay on, some may be traumatised by the event (especially those with children) and decide to leave.

If you choose not to refund the renter, as you don’t wish to lose out financially, claim on your insurance and pay an excess or forfeit any no claims discounts, this could lead to guests departing on bad terms. After all, their holiday has been disrupted and why should they incur further expenses.

With the increasing trend in holiday rental reviews and pasts guests ability to post negative comments about your holiday home on the internet, this could damage your reputation should they do so. Consider these implications before refusing a refund and always try to rectify problems with unhappy guests before they leave.

Option two – refund and claim on your loss of rent insurance

Any comprehensive holiday rental insurance policy should insure owners for loss of rental income. It is important to check with the insurer under what circumstances you can claim, as most are likely to have different opinions on whether a claim is valid. If the insurer says you can’t claim because the damage has been rectified, even though guests feel their safety as been compromised and want a refund, you could lose out on valuable rental income.

What you need is a policy that provides loss of rent so you can refund guests if they wish to leave, even after repairs. Our policy will.

This is how Schofields would deal with the claim

Following the break-in, our holiday let insurance would allow the property owner to claim for loss of rental income (from their own insurance) for the remaining days of the holiday. We would be sympathetic and understand that some people will feel unsafe following a break-in, even if the damage has been repaired. Whether the holiday rental owner reimburses the guests straight away or when the insurer settles the claim is their decision.

It is important to note that the loss of income amount would be limited to the amount of rent paid for the remainder of the holiday. So if guests move out and decide to check into a five star hotel and then send you the bill, the rental sum you can claim for (for this rental) will only be for the nights they didn’t occupy your property.

Select the cover you need

Unfortunately when people choose insurance, they often select the cheapest option without fully understanding the circumstances in which the insurance will and won’t, protect the property. Happy guests often return, so its important to ensure that your insurance covers them, and you should the worst occur.

A comprehensive holiday letting insurance policy should provide loss of rent cover, so you don’t lose valuable income. This insurance should also reimburse you for any future bookings you can’t honour due to loss or damage to the property by insured perils, such as a burst, flood, fire, theft etc. Ensure you are covered should a major loss occurs and you have to cancel months of bookings. Our policy covers two times the contents sum insured for loss or rent.

When incidents aren’t covered by insurance, for instance a power cut or boiler breakdown, the onus will be with the owner on whether to compensate holidaymakers.

Related posts:

1. Airport closures – should you give guests a refund?
2. Loss of rent insurance for a holiday let
3. Holiday Cottage Emptied by Guests
4. Alternative Accommodation Following a Claim
5. Holiday let insurance to cover damage by guests