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Understanding Holiday Home Insurance: What You Need to Know

Find out everything you need to know about insuring your holiday home.

What is a Holiday Home?

A holiday home is an additional property separate from your main residence. It’s designed for holiday stays and can be used by you, your family, friends, or even paying guests. Whether your property is a cosy cottage retreat on the Cornish coast or a wooden lodge in the highlands of Scotland, it won’t be covered by standard home insurance. This is because holiday homes face unique risks, such as being empty for extended periods or being occupied by paying guests.
To adequately protect a holiday home, you’ll need specialised holiday home insurance. If you intend to let it out, you’ll require let-property insurance to cover specific risks associated with letting your property, such as damage caused by tenants.

What is an FHL?

Holiday homes are categorised differently from main residences for tax purposes. Known as Furnished Holiday Let’s (FHL’s). An FHL is a status applied to holiday homes that meet specific criteria for short-term rental. Up until March 2024, FHLs benefited from distinct tax advantages, making them an appealing status for property owners. To qualify as an FHL, the property needed to be available for short-term rental on a commercial basis for a set number of days each year.

One significant benefit of having a property classified as an FHL was the favourable tax treatment of finance costs. Unlike standard rental properties where interest relief is capped at 20%, FHL owners could deduct interest when calculating profits, potentially reducing their income tax by up to 45%.

However, in the Spring 2024 budget, the Chancellor announced that the special tax rules for FHLs would be abolished starting in April 2025. This change signifies a shift towards more uniform tax treatment for all property types, impacting future tax planning for holiday home owners.

Holiday Home Cover Explained:

Holiday home insurance differs significantly from standard home insurance due to the unique ways holiday properties are used. Standard home insurance typically covers a property that serves as your main residence, where you and your family live full-time.

In contrast, a holiday home is not occupied year-round. It might be used for holidays, but it often remains empty for extended periods, which increases the insurance risk. Unoccupied properties are more vulnerable to issues like theft, damage, and maintenance problems.

The type of coverage you need for your holiday home can vary. For example, if your property is particularly large and has more than six bedrooms, you’ll need to consider a large house policy.

Additionally, if you rent out your holiday home to guests, you face additional risks such as potential property damage, vandalism, or injuries sustained by guests during their stay. Specialised let-property insurance is necessary to manage these risks effectively, as it provides coverage tailored to these unique circumstances.

Holiday Home Cover Types

Holiday home insurance, like standard home insurance, can be divided into two types: buildings insurance and contents insurance. You can choose to cover just the building, just the contents, or opt for a combined policy that includes both. A combined policy is often the most efficient option, offering potential cost savings and easier management compared to maintaining separate policies.

What Does Holiday Home Insurance Cover?

Holiday home insurance provides specialised coverage tailored to the unique needs of properties that are used intermittently. It typically extends beyond standard home insurance policies by covering longer periods of unoccupancy and protecting against a variety of risks. Here’s a detailed look at what is covered and what is not covered for both buildings and contents, with a special note on rental income coverage.

Cover for Buildings

This covers the structure of the holiday home, including walls, roofs, floors, and built-in fixtures. It protects against damage caused by fire, storms, floods, and other natural disasters.

What’s Covered

checkFire, Smoke, Explosion, Lightning, and Earthquake

Protection against damage to your holiday home from fire, smoke (excluding gradual damage), explosions, lightning strikes, and earthquakes ensures comprehensive protection against these high-risk events.

checkStorm, Flood, or Weight of Snow

Coverage for damage due to storms, floods, or heavy snowfall, which is crucial for holiday homes located in areas prone to such weather conditions.

checkTheft and Vandalism

Even when the property is unoccupied for extended periods, holiday home insurance covers theft or attempted theft and vandalism, safeguarding your investment against such malicious acts.

checkEscape of Water and Oil

Covers sudden and accidental escape of water from plumbing or heating systems, and oil from domestic heating systems, which helps in mitigating significant water damage risks.

checkAlternative Accommodation Costs

In case your holiday home becomes uninhabitable due to damage from an insured event, the policy covers the cost of alternative accommodation.


As standard, you’re covered for up to 60 days of unoccupancy. You can extend this coverage based on your specific needs.


Public liability is covered as standard.

What’s Not Covered

not coveredGeneral Wear and Tear

Damage from normal wear and tear or gradual deterioration of the property is not covered, highlighting the importance of regular maintenance to avoid such issues.

not coveredDamage from Poor Maintenance

Any damage resulting from neglect or failure to maintain the property properly is excluded, emphasising the need for regular upkeep to keep the property in insurable condition.

not coveredGradual Damage

Issues like slow leaks or mould growth are not covered as these are considered preventable with regular property inspections and maintenance.

not coveredWater Damage

Caused by leaks from swimming pools, fixed hot tubs, jacuzzis & fixed spas.

not coveredBusiness Liability

Cover for business liability is not covered by our polices

not coveredLoss of Rental Income

Standard holiday home insurance does not cover loss of rental income. To obtain this coverage, you’ll need to specify you let your property. This cover protects you if your property becomes uninhabitable due to an insured event like a fire or flood. When applying for this coverage, you must specify how frequently your property is rented and the maximum number of tenants it can accommodate at one time. Any changes to these details must be reported to your insurer. Note that this coverage does not include loss of income due to tenant cancellations or voluntary unoccupancy.

Cover for Contents

This covers personal belongings inside the holiday home, such as furniture, appliances, and electronics. It protects against theft, vandalism, and accidental damage.

What’s Covered

checkTheft or Attempted Theft

Coverage includes theft or attempted theft of contents, which is essential for holiday homes that may be unoccupied and therefore more vulnerable to such risks.

checkFire and Smoke Damage

Protection for contents against damage from fire and smoke, ensuring that your personal belongings and household items are safeguarded against these destructive events.

checkMalicious Damage

Coverage for deliberate damage to contents, including acts of vandalism, is provided, which is particularly important for holiday homes that are left vacant for extended periods.

checkAccidental Damage

Optional coverage for accidental damage to contents.

checkHigh-Risk Specified Items

Includes specific items like jewellery, watches, and electronics up to defined limits, ensuring that your valuable items are adequately protected.

What’s Not Covered

not coveredBusiness Equipment

Personal belongings that are stored elsewhere, such as in a commercial storage facility, are not covered under the holiday home contents insurance policy.

not coveredItems in Storage

Any damage resulting from neglect or failure to maintain the property properly is excluded, emphasising the need for regular upkeep to keep the property in insurable condition.

not coveredWear and Tear

Normal wear and tear or gradual deterioration of contents is excluded, reinforcing the importance of maintaining and periodically updating personal items to ensure they are covered.

not coveredPedal Cycles

Pedal Cycles: When you take your pedal bikes to your holiday home, it’s important to note that they are not covered under your contents insurance. You will need to insure them separately with a distinct policy.

not coveredConfiscated or Seized Items

Items confiscated by authorities or destroyed under legal orders are not covered, making it important to comply with legal and regulatory requirements.

How much will it cost to insure your holiday home

Similar to home insurance, the cost of covering a holiday home can vary widely, with premiums determined by various factors, including:

  • Market Value of the Property
  • Cost to Rebuild*
  • Property Type – bungalow, cottage
  • Location of the Property
  • Type of Construction – i.e wooden frame
  • Frequency of Occupancy or Rental
  • Total Value of Contents
checkDo: Use the free online BCIS tool to calculate the rebuild cost of your holiday home
not coveredDon’t: Under insure your property or contents

Consider how often the property will be occupied and by whom (e.g., family, friends, paying guests). Ensure the policy covers periods of vacancy.


The location of your holiday home can impact the type of coverage you need. For example, homes in flood-prone areas may require additional flood insurance.
Implementing security measures like alarm systems, secure locks, and surveillance cameras can reduce insurance premiums and enhance coverage.

Policy Exclusions

Carefully review policy exclusions to understand what is not covered. Common exclusions may include wear and tear, damage from pests, or certain types of water damage.

Claims Process

Always familiarise yourself with the claims process, including how to report a claim, required documentation, and expected timeframes for resolution.

Tips for Maintaining Your Holiday Home

Regular Maintenance

Conduct regular maintenance and inspections to keep the property in good condition and minimise the risk of claims.

Accurate Valuation

Ensure the property and its contents are accurately valued to avoid underinsurance or overinsurance.

Keep Records

Maintain detailed records of the property’s condition, contents, and any maintenance or repairs performed. This can help expedite the claims process if needed.

Communicate with Insurers

Inform your insurer of any changes in usage, occupancy, or security measures to ensure your policy remains up-to-date and provides adequate coverage.


Holiday home insurance is essential for protecting your investment and ensuring peace of mind while enjoying your holiday property. By understanding what it covers and why it’s important, you can make informed decisions to safeguard your holiday home against various risks and uncertainties.
You can speak directly to one of our UK based team members by calling 0333 311 0390 to discuss your specific needs, or get a quote for your holiday home today.

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