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Holiday Homes – Getting your Buildings Insurance Right

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Avoiding underinsurance for holiday home owners

As holiday home insurance specialists we understand the industry and know the insurance needs and demands of letting a holiday property; that’s what comes with using a specialist. Please take a minute to read Holiday Homes – Getting your Buildings Insurance Right and give us a call if you have any questions.

Our knowledge means we’re here to give you the peace of mind that should the worst happen you’ll be covered and supported.

In order to do that we want to make sure that you have the right cover in place and an area of your insurance policy you should be checking is that your building sums insured are correct.

The risks of underinsurance

The sum insured is the maximum amount your insurer will be able to pay out if you need to make a claim for loss or damage.

For this reason it’s vital to get it right and ensure it’s sufficient to cover the cost of rebuilding, repairing or even replacing your property should the worst happen.

If you’re underinsured you bear the risk that you may have to fund a proportion of the cost from your own pocket.  This can be potentially crippling to your own finances or that of your holiday business.

The cost of rebuilding and not the value of your property

A common misconception is often that your sum insured should represent the market value of your property.  For insurance purposes your sum insured should actually reflect the cost of rebuilding your property.

This can be a tricky figure for holiday home owners to calculate so please do take time to consider what that figure should be.

You’ll need to think about:

  • The building cost of reinstating your property; this can include items such as swimming pools, paths, drives, patios and other things that you might not think about such as satellite dishes or fences and hedges.
  • The cost of replacing fixtures and fittings, for example do you have built in wardrobes, specialist light fittings or bedroom furniture that would cost significant sums to replace or restore?
  • Will debris need to be removed from the site and what implication will this have on the cost of restoring your property?
  • What will the cost be of complying with EU legislation Local Authority Buildings Regulations or other statutory requirements?
  • Professional fees; to get your property back to where it was before the incident you’ll likely need to consult with engineers, architects and surveyors.  Their fees will need to be included in your calculations.

Index Linking – make sure the initial figure is correct

Your buildings sum insured is index-linked, which means that it adjusts according to inflation. This ensures your sum insured is increased in line with any changes in the cost of rebuilding your property.

Despite this index linking it of course remains vital that the sum insured was correct in the first place.

Have you made improvements? Let us know

As you make improvements to your holiday home make sure your sums insured represent the increased cost of replacement and don’t wait for your insurance renewal to make the increases.

For example, if you add a hot tub to the garden or update the interior of the property contact your insurer to let them know and make sure they’re covered from day one.

Calculating your Sums insured

If your holiday home falls within a range of standard house types the Association of British Insurers offers a rebuilding cost calculator (http://abi.bcis.co.uk/), which will help you to assess the level of insurance you need.

This is however no substitute to instructing a professional Surveyor to prepare a Rebuilding Cost Assessment for insurance purposes.  Although there is a cost for these surveys they’ll make sure you have the right level of cover.

To search for a chartered surveyor in your area please click here: http://www.ricsfirms.com/

What should you do now?

If you need to adjust your holiday home insurance once you have reviewed your sums insured please contact a member of our team on 01237 429444.

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