UK holiday home insurance and Airbnb insurance
November 6, 2024If you own a holiday home in the UK or let your home – even temporarily – on the Airbnb accommodation-sharing website, there are important implications for your home insurance.
The insurance that regularly covers your home or holiday home is simply inadequate once you start taking paying guests. In the eyes of your insurer, it is no longer simply your residence, but also a business. In that case, you will need specifically formulated holiday home insurance.
Why your home insurance isn’t enough
Your insurer takes a quite different view of a property used – however briefly or infrequently – as a business rather than a home. The risks are of a different order.
The business involves other people coming in and out of your home, staying several nights or more, and creating additional potential liabilities for you to bear. Those liabilities need adequate insurance – and your regular home or holiday home insurance typically does not meet these extended liabilities.
What cover do I need for my UK holiday home if I let it?
You will almost certainly need specialist holiday let insurance to cover the risks of what has become a business proposition, namely:
- indemnity against claims from any of your guests who suffer an injury or have their property damaged while at your holiday home;
- adequate cover against the increased risk of damage to the structure and fabric of your home and any loss or damage to its contents;
- depending on the holiday let insurance policy you choose, you may even be covered for and provided compensation for the loss of rental income you may experience following an insured event which leaves your second home temporarily uninhabitable; and
- in some cases, your policy may even provide cover against malicious damage caused by your holiday let.
I run an Airbnb – doesn’t their insurance cover my property?
One of the pitfalls for many Airbnb hosts is the false sense of security by the platform’s own Host Guarantee programme.
The programme promises Airbnb hosts compensation for any damage caused by their guests – typically including any extra cleaning required or the eradication of smoke odour. More important than the total amount of compensation for which you might be eligible, however, are the restrictions and limitations on the scope of the guarantee:
- there is no cover for the theft of cash or securities from your home;
- injuries to or the loss of your pet or pets are not covered;
- only limited cover is provided for high-value contents, such as artwork, collectables, and jewellery;
- cover does not extend to shared or communal areas of your home; and
- the guarantee offers you no public or landlord liability indemnity (required if one of your guests suffers an injury or has their property damaged, holding you liable and claims compensation).
Other considerations when letting a second home or Airbnb
If you intend on letting your second home or plan to run an Airbnb, you will need to get notify your mortgage lender that you are letting the accommodation and get their approval. This is because any mortgage you have on the property may only be for private, residential use and not business use.
You should also note that there will also be a raft of obligations with which you are legally required to comply – such as maintaining safe and hazard-free accommodation, arranging regular gas and electricity inspections, and fitting the required smoke alarms and carbon monoxide (CO) detectors.
In summary, if you let your UK holiday home or use it for Airbnb:
- standard home insurance typically is insufficient. You’ll need specific insurance for letting, covering liabilities, guest injuries, and potential income loss. Airbnb’s Host Guarantee has limitations;
- you must notify your mortgage lender of any change of use of your property; and
- you need to ensure your property complies with legal safety requirements.