5 Insurance Risks When Holiday Letting
Holiday letting can be a great way to earn an income to support the expenses of owning a holiday home. However, there are several risks that holiday home owners take every time they let a ‘stranger’ stay in their homes.
Thankfully, a comprehensive holiday let insurance policy should cover these risks so owners don’t have to lose out financially. But be aware, some don’t, especially foreign policies. Ensure you are protected against these 5 holiday letting risks that could eliminate your holiday letting profits.
1) Damage by guests
The constant turnover of holidaymakers staying at your holiday home means that wear and tear is to be expected. What will inevitably happen is that a booking will cause substantial damage, although usually by accident.
Some common incidents include:
- Food stains, pen marks, heat rings and scratches on furniture
- Soiled bedding
- Cracked bathroom fittings
- Broken TV’s and jammed DVD players
- Spillages and burns on carpets
- Damaged beds due to excited children using them as trampolines
Although by taking a damage deposit owners can deduct for small incidents of damage, there will be occasions when the damage will cost more than the security deposit taken.
Solution: Accidental damage insurance
When holiday letting, all owners should have insurance which covers accidental damage to contents by paying guests, not just family and friends.
It’s important that French holiday home owners note that insurance in France does not usually cover damage by guests (if damage is caused by French guests, you should be insured as they are likely to have personal liability insurance, but not by guests of other nationalities). That’s why an English policy is usually advised.
2) Malicious damage
Unfortunately, not all damage is accidental and some guests can be disrespectful to your property and even deliberately vandalise it. There have been instances when owners have discovered damage to lights, TV’s and furniture, all evidence to suggest a physical fight or a party that has got out of hand.
Although rare, there are holidaymakers (scammers) who complain about the standard of accommodation, noise etc. without reason, in an attempt to get a refund or compensation. You need to be protected should they turn malicious.
Solution: Malicious damage insurance
Make sure your are insured should guests cause malicious damage to your holiday home, as in these situations the cost of repairs can be substantial.
3) Theft by holidaymakers
It is inevitable that when holiday letting small items will go missing, whether items are taken home by mistake in a last minute packing frenzy or intentionally, it’s part of letting. We recently discussed a holiday cottage being emptied by a holidaymaker who deliberately rented the cottage with the intention of stealing items.
Solution: Theft insurance – including theft by guests
It’s essential when holiday letting to have theft cover which covers theft by people lawfully in the property, should a guest decide to empty your home of valuables. Make sure ‘theft by non-forcible’ entry is covered.
4) Guests who refuse to leave
Should a holiday party decide to ‘squat’ in your holiday let and refuse to leave, you shouldn’t physically force them out of the property. There are legal procedures that you should follow.
Solution: Legal expenses cover
Legal expenses insurance will help you take the necessary legal steps to evict guests who refuse to leave.
5) Injury to guests
Slips and trips in wet bathrooms, over rugs or injury on a cracked floor tile for example, can be costly should the third party seek compensation. Should your regular maintenance fail to identity a potential hazard, you need to be protected.
Solution: Holiday let public liability insurance
Ensure your public liability insurance extends to cover guests should they injure themselves on your property and take legal proceedings against you. Note that some foreign policies have low levels of cover, an indemnity of £3 million is recommended.
To summarise:
Although holiday letting can be rewarding, the above risks can suddenly wipe out any profits should you not be adequately insured. Comprehensive insurance for holiday lets should cover these risks so you don’t lose out financially.
Consider taking a security deposit from guests so you can deduct for small instances of damage, and for large claims it can be used to cover the policy excess. It’s also worth considering your policy excess because if it’s too high claiming on your insurance may not be worthwhile, leaving you to pick up the bill.
There is also the issue of proving who is responsible for damage after the event if it hasn’t been spotted by changeover staff. In this situation you will need to rely on your insurance to cover the loss or damage.
One last tip, if you discover damage upon checkout, take photos to support your insurance claim or to justify any charges to guests.
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