Holiday Homes Insurance

Are you one of the lucky ones who own a second property? Many second home owners bought the property for one of three reasons; actually there could be more than one reason why you have decided to buy that house on the beach. Whether you purchased the property for investment, holidays or your retirement, there are many financial implications involved, one of them being insurance.

What insurance do I need for my holiday home?

You will need both home owners and householders insurance for your holiday home, just like you do for your permanent residence. With the ownership of a holiday home there are specific risks, resulting from the different circumstances and unusual needs, to take into account when looking at insurance.

Home owners

Home owners insurance protects the house itself against major perils such as storm, fire and water damage. Depending on the location of your holiday home, be sure to check that landslide cover is included in the policy. If you decide to let your holiday home to tenants the home owner’s insurance is still valid. However, if the house is going to be vacant for more than three months a year you need to advise your insurance company thereof.

Householder insurance

Householder’s insurance is another story! Householder’s insurance covers the furniture, equipment or other content in the house. If you let out your property, whether it is your holiday home or your permanent residence, your insurance company must be informed thereof. You are only covered for theft if it was the result of forcible or violent entry and exit to the property. So, to ensure that you are paid out, should you discover items missing from your house after the tenants have left, you need to inform your insurer of the details. This additional insurance should not increase your premium by much but will protect you against possible losses in future.

Optional Insurance

You need not take out a separate policy for your holiday home, the insurance company will just extend your existing policy to include the details of your other property. This type of cover is usually covered under the optional insurance section.

The question of Public Liability

But wait, there is more! Your existing household policy probably includes Public Liability Insurance, but it is not applicable when you rent out the property. It is therefore of the utmost importance that you take out public liability insurance to specifically cover any possible claims from tenants or holidaymakers. Also make sure that you have accidental damage cover in your household policy should a loss by tenants be classed by the insurance company as accidental damage.

Claim your holiday home insurance against tax

There are tax implications that you need to take note of when dealing with your holiday home. You may decide to only rent out your holiday home for part of the year as you like to spend time there with your family as well. Your income from rental may be much less than the annual cost of the property. You can claim the difference as a tax deduction, but it is only applicable to certain items such as home loan interest, insurance, levies and maintenance costs. You can also claim the cost of a letting agent if you make use of one.

But my holiday home is in Spain…

Now you are talking specialist insurance! You do not have to take out insurance in Spain because the house is there; or anywhere else in the world for that matter. You can arrange the insurance from South Africa through a specialist broker; if you do take out the insurance overseas make sure the contract is in English so that you can understand the terms, conditions and cover.

Review your cover regularly

As is the case with your private residence, you should also review the cover of your holiday home at least once a year to ensure that you are sufficiently covered and not under- or over-insured. You may have refurbished your holiday home and forgot to advise the insurance company. Should there be a burglary at your holiday home you will get the nasty surprise that the average clause is being applied to your claim as you are under insured. Don’t let that happen to you…Enjoy your holiday home and have fun.