Why cheap holiday home insurance is pointless

It seems everyone is trying to cut costs when it comes to insurance. However, for the sake of saving a few pounds off their premiums, homeowners could find themselves seriously out of pocket if something untoward happens… by not having adequate insurance.

I have found a cheaper quote, can you match it? is a question insurers face on a daily basis. But you should ask yourself – why is the quote cheaper?

Is the cover the same? If the cheaper quote includes an array of exclusions and limitations then this is likely to be reflected in the price. As with third party motor insurance, for complete peace of mind you need fully comprehensive cover.

Saving a few pounds is no use if that saving is achieved by extra ‘exclusions’. It’s false economy to buy based on price alone, as any short term savings could be outstripped by expensive repairs, which you have to pay yourself.

Questions to ask your holiday home insurer before buying a policy

Before choosing an insurance policy you should read the small print to ensure the policy covers what you think it does. Many people don’t read the small print. In fact, research by Aviva found that 33% of people never fully read their home insurance policy and 25% of people don’t know what it covers. It is likely that they will only find out when they claim, and it’s too late.

Most holiday homes insurance policies provide cover for buildings and contents against a wide range of risks, including fire, theft, lightning, flood and subsidence. But what about the exclusions and limits when the property is unoccupied or holiday let?

When you compare holiday home insurance policies, you should ask the insurer these questions before hiring them…

What are the exclusions during periods of unoccupancy?

• is there a limit on the number of days the holiday home can be empty – 30/60/90 days
• does the insurance cover damage by the escape of water from burst pipes during unoccupancy
• do I have to turn water off at the mains and drain heating equipment during unoccupancy
• do pipes and water tanks have to be lagged
• do I need to leave the central heating on at a set minimum temperature during unoccupancy
• what are the inspection requirements when the holiday home is empty
• does the gas and electricity need to be turned off

These are essential questions to ask, especially concerning ‘escape of water from burst pipes’ as water damage is the most common claim in holiday homes. Failure to comply with these requirements could invalidate cover when holiday homes are left unoccupied.
Basically, would the insurer pay out following a burst pipe that ran for 5 days and cost £50,000 worth of damage?

What happens should I need to claim?

• can I authorise repairs myself straight away
• will you send a loss adjuster
• my holiday home is overseas, do you have staff there
• can I use my own tradesmen or do I have to use those recommended by you
• who will deal with my claim – is it call centre, will I have a point of contact
• do I have to inform you of a claim within a set number of days
• do you need a copy of the receipts for the items I am claiming for
• what happens in the event of storm damage – on some policies, storm damage isn’t covered unless wind speed and rainfall exceeds a set minimum. For example, wind speeds must exceed 55 mph, waterfall more than 40l/sq m/h
• will my premium increase if I claim

It is often said that insurance is only as good as your first claim. It’s important to understand the insurers claims process to ensure speedy replacement or repairs. At Schofields all claims are dealt with in house, with a personal service.

Is accidental damage cover included?

• is there a charge for this
• is damage by family and holidaymakers covered – usually not in foreign policies
• is malicious damage covered

Does the policy include public liability insurance?

• how much cover is given – liability cover in foreign policies for Spain and Portugal is often extremely low, around €100,000 – €160,000
• does this extend to cover holidaymakers
• does this cover the use of our swimming pool

On the subject of public liability, does the policy cover employees who carry out domestic duties at my holiday home – such as the pool man or changeover staff?

What theft cover is included?

• does the policy require violent and forcible entry for a theft claim to be valid
• does it cover theft by guests

What does the ‘community’ buildings insurance actually cover?

• Am I covered for water leaks to apartments below?

Community policies often only cover the common parts of a complex, such as the walkways, not fixtures and fittings – like kitchen units, wardrobes, baths, toilets etc. This means  individual apartments wouldn’t be fully covered.

Does the buildings insurance cover my swimming pool and outbuildings?

Is earthquake damage covered?

What are the security requirements?

• do you have to fit specific locks, grilles or shutters to doors and windows

Failure to comply with the insurers security requirements when your holiday home is unoccupied could mean your claim is ruled invalid

Are contents replaced new for old, do you make any reductions for wear and tear?

Will I get the policy documents in English?
Understanding exactly what a policy covers even in English can be a feat in itself. Language barriers and foreign property laws can make understanding foreign policies a complex task.

What are the policy excesses?

• can this be increased in order to reduce the overall premium
• for earthquake damage – on some policies this is a % of the buildings sum insured, which could be thousands

Are there limits to the amount that will be paid out for particular items?

• for electrical items
• items in the garden and outbuildings such as tools and bicycles

Following a claim which results in my holiday home being uninhabitable, am I covered for the loss of rent?

• what is the limit

In the event of a major claim, are the costs of emergency travel to our property and the cost of alternative accommodation covered?

• does the provision of alternative accommodation include guests

Are legal expenses covered, for disputes such as evicting a holiday maker who refuses to leave?

• what is the limit?

Does the policy cover replacement of locks should we loose our keys?

How do I cancel my policy?

• once I get the full policy is there a cancellation period – 14 days is standard in the UK
• are there any penalties for cancelling

It is common in France and sometimes Spain for insurers to auto renew policies unless you give two months’ notice of cancellation in writing

What are your administration charges?

• when will these occur, every time I make changes to my policy

Am I covered for damage by pets?

How do I complain, are you regulated?
UK insurers are regulated by the FSA, but what happens if you have a dispute with a foreign insurer

Who will deal with the day-to-day management of my policy?

• who will be my point of contact
• are you simply recommending this policy because you are getting a commission

What is your experience in insuring holiday homes?

Select cover that you need – not just cheapest

To summarise…

When you take out an insurance policy it is your responsibility to read the terms and conditions carefully and fully understand the circumstances in which it will, and more importantly, won’t protect your property.

It’s false economy to choose a policy just because the quote is cheap. Any short term savings could be outstripped by small print which makes claims virtually impossible – leaving you to pay the bill.

Choose a policy based on value for money – maximum cover with minimum exclusions like our second home insurance.

Related posts:

1. French Insurance Chimney Sweeping Clause
2. MPs’ Second Home Insurance Claim Declined
3. Flood & storm insurance for property abroad
4. Holiday Home Burglary Risk
5. 5 Insurance Risks When Holiday Letting