Getting the right sort of insurance cover for your valuable investment
not only makes good financial sense, it is a legal requirement when holiday letting your property. A good insurance broker will walk you through all the necessary ins and outs of getting the right cover . Here’s what David Morris the principle at holiday rental specialist J.L. Morris Insurance Brokers advises you should be looking for when selecting self catering insurance.
Firstly, it is essential that the insurance you obtain provides cover for a commercially let property.
Sounds obvious, but in our 25 years experience we have come across so many inappropriate styles of insurance, it is unbelievable! Many of our clients have come to us as most insurers do not understand self catering and therefore do not know of the special cover you require.
You are running a business, so you need a business insurance policy which will include
- Loss of income
- Full cover whilst the property is unoccupied
- Damage caused by holidaymakers
- Theft by holidaymakers
- Public liability
- Employers’ liability
- Specialist policies will also include, at no extra charge, ‘nice to have’ cover such as goods in transit and cash.
Loss of income
- This must never be confused with loss of rent. Loss of rent is very, very, restricted.
- If your property and / or contents become damaged it is possible you will not be to let, and therefore you will lose money.
- But it is not just the obvious, such as fire and storm, but a long list of other reasons that could cause you not to trade, such as:
- Defective sanitation
- Pests and vermin (including bed bugs)
- Denial of access
- Murder and suicide
- Oil and chemical pollution
- Any other damage or loss cover by the buildings and contents
You should also choose your indemnity period and sum insured carefully.
The indemnity period is the maximum time for the insurers will pay your loss of income following the damage or loss.
If your property is Listed, in a Conservation Area, or where properties are ‘tightly packed’ so that vehicle access by builders is difficult and adds time to the repairs, you need an indemnity period that is appropriate. 12 months may not be enough; 24 and 36 months are easily available.
The sum insured is to represent the value of your gross profit over the selected indemnity period.
Sounds complicated? Choose a self catering policy that gives you cover – as a standard feature – for values in excess of what you think you need eg £500,000 over 24 months.
Full cover whilst the property is unoccupied
Unless you are very fortunate, your property will not be occupied every day of the year.
Your cover will become restricted unless you take action to safeguard the property. Each self catering policy will have differing inspection and heating requirements, but unlike any other type of property insurance you will have full cover so long as you follow the policy requirements.
Damage caused by holidaymakers, Theft by holidaymakers
Accidental damage and malicious damage by holidaymakers is a standard feature of cover, as is theft by holidaymakers.
Your self catering policy will not have a locks and bolts security requirement (other than in very unusual circumstances). If locks and bolts are specified it is not a self catering policy!
Public liability and employers’ liability
If you are negligent your policy will pay claims made against you by members of the public (eg holidaymakers, the postman, your letting agent) and your employees.
How to obtain this specialist cover
At the time of writing there are three, maybe four, sources of this cover, and these sources are all Insurance Brokers. You cannot obtain this cover directly from an insurance company, or via (price) comparison sites.
Speak to the Insurance Broker who will ask you all of the relevant questions so as to be able provide a written, formal quotation supported by a Key Facts policy summary. This will allow you to make an informed decision.
David J Morris ACII
Chartered Insurance Broker
J L Morris (Insurance Brokers) Limited
telephone: (01202) 642840