Insuring A Holiday Home Within the UK

If you own a second home within the UK and you want it rented to holidaymakers or make use of it as a second home, you will want to know the importance of making sure your investment is kept safe, even when you’re not there.

A standard home insurance policy will not usually cover a second home if it is left vacant for more than 30 days of the year – especially during periods of slow business or if you need to make repairs to the property.

The question is, if you own an apartment by the sea or a cottage in the sprawling countryside, what sort of insurances should you have in place on your UK holiday home?

Holiday Home Insurance

Holiday home insurance is specially designed for those properties that are left unoccupied for 30 days or more during a year. This is because most home insurance policies will not cover holiday homes under a regular house insurance policy due to the increase in risk.

Because you or anyone else might not be there for long periods of time, insurers will consider the property more at risk.

Empty houses may be more at risk of break-ins and vandalism in the periods between bookings, as well as being more at risk from burst pipes and storm damage, and because you as the owner aren’t based there all the time, you might not be able to remedy these issues quickly.

Buildings Insurance

When it comes to necessities, buildings insurance is a legal requirement if you have a mortgage on a second home. This covers the structure of the house, everything from the walls, ceilings, and to the rafters on the roof, but it can also cover any external buildings and other luxuries such as swimming pools.

Buildings insurance will help cover the property itself in the event of storm damage, flood damage or subsidence as a result of an extremely wet weather.

Contents Insurance

While it is not legally required, having a form of contents insurance for your holiday home is a wise investment, it helps to cover equipment, furniture, and even appliances against damage sustained by third parties – including your guests.

Because you’re not always present at the property, making a checklist of which belongings you leave when you are not there is a good idea – keep a note of any expensive equipment you might leave.

Securing these possessions against a contents insurance or gadget insurance policy can help to keep your mind at ease, knowing that they’ll be covered in the event of theft or become damaged due to the behaviour of one of your guests.

Public Liability Insurance

Because you’ll have guests staying at the property when you are not there, you need to ensure you have some Public Liability (PL) insurance in place. PL insurance helps to cover you as the homeowner in the event one of your guests gets injured or fall ill while staying at your property.

What Should Be Included?

Each insurer will be different in what they offer as part of a holiday home insurance policy, but you should be looking for the following features:

  • Accidental damage cover – helps to protect your property against unintentional damage caused by your guests.
  • Loss of income cover – helps to cover you if you are unable to rent out the property because of repairs in the event of weather-related damage or subsidence, which may have caused damage to the property and render it inhabitable.
  • Home emergency cover – gives you and your guests access to a 24-hour emergency hotline to call in the event of burst pipes or other domestic emergencies, which can then be used to arrange repairs in your absence.
  • Employers’ liability cover – if you employ a member of staff – such as a cleaner or maintenance man – and they get injured on your property, this cover will help cover legal costs if a case is brought against you.
  • Personal possessions cover – helps to cover your own possessions while they are in the home, it can be worth double checking that you don’t have similar cover elsewhere – such as gadget insurance or those offered as part of current accounts or credit cards – to ensure you don’t overinsure.
  • Alternative accommodation cover – helps to relocate your guests to alternative accommodation, such as a hotel, in the event of damage to the property that renders it inhabitable.
  • Emergency travel – if you need to travel home to carry out repairs or sort out a claim, this cover can help you to recoup some of the costs of travel expenses as a result.

As always with any insurance product, it is essential that you read the small print before you sign an agreement, as some insurers may include exclusions which may affect your policy price and level of cover.

Can I Reduce My Premium?

Much like with your regular home insurance policy, taking some steps to beef up the security of your holiday home can help bring down your holiday home policy price. Think about the following when it comes to securing your home before you start renting it out:

  • Change your current lock set for a newer, stronger set to decrease the chances of a break-in.
  • Consider putting locks on the windows to deter thieves.
  • Invest in an alarm system for when you’re not there, just remember to leave clear instructions for your guests as to how to turn it on and off again each time they leave the property vacated.
  • Buy a safe and keep it in a secure location, and use it to secure personal possessions such as spare keys and electronic devices.

Owning and maintaining a holiday home can be a long process, but by taking the time to get your insurance, you can help yourself to ease the burden and ensure that not only are your guests safe in the event of an incident but that your home is protected even when you’re not there.

What is Automatic Enrollment?

With a burgeoning ageing population that is heavily reliant on State Welfare, the UK government has introduced new reforms in which employers will now eventually have to offer a workplace pension scheme and enrol eligible workers in it.

This is called Automatic Enrollment, and it has been introduced to help people save more for their retirement.

The new system is being introduced in phases, and by 2018, all employers in the UK will have to comply with it.

While earlier, it was a matter of choice, it has now become a legality to comply with, for employees and employers.

If your financial situation does not allow paying towards an employee pension scheme, do you have a choice?

Here are some facts about Automatic Enrollment.

When will you be automatically enrolled?

As mentioned earlier, the rule is gradually being implemented. The largest employers in the UK (more than 120,000 staff) were the first ones to introduce the new rule. The medium-sized employers are now following suit. The small-sized employers will be the last ones to introduce it. In fact, Auto Enrollment has also been extended to companies with fewer than 30 people.

Depending on what category your employer belongs to, you can expect to be automatically enrolled somewhere in the next three years.

You will be informed about the exact date by your employer well in advance allowing you to plan out your finances accordingly.

The entire system is being governed by the Pension Regulator to ensure that workers are introduced at the right time.

The Eligibility for Automatic Enrollment

According to the new system, any person working in the UK above the age of 22 but under the State Pension Age who earns more than £8,105 annually will be eligible for automatic enrollment.

Workers who earn lesser or who work part-time can request to be enrolled. If they earn more than £5,564 annually, then their employer will also have to make a contribution towards their pension scheme.

If you are employed but above State Pension Age or below the age of 22, then you can still choose to opt-in your employee pension scheme.

Do you have a choice?

Yes, You do. You can read our article, ‘What Are The Benefits of Automatic Enrollment?‘ to get an idea of what you will be getting or missing out.

Employees are given a letter informing them about the starting date for Auto-Enrollment, details about the scheme and the Pension Provider.

You can then request an opt-out form from the pension provider if your financial situation does not allow you to contribute towards an additional pension scheme.

If you opt out within one month of enrollment, then you will receive a refund of any amount that you may have contributed towards the scheme.

If you choose to opt out at a later time, then any amount that you may have contributed towards the scheme will remain in your pension pot until retirement.

Employers are required to re-enroll people who have opted out after every three years. So, even if you have opted out of the pension scheme, you will be automatically re-enrolled after three years. You will then have the choice to remain in the scheme or will have to complete the opt-out procedure once again.

But opting out deprives you of the employer’s contribution towards your pension and the government’s tax relief.

What will be my contribution?

Currently, only a minimum contribution of 0.8% of your earnings will have to be paid towards the workplace pension scheme.  The employer will add another 1%, and the government will add 0.2% in the form of Tax-Relief.

However, these amounts will increase in 2017 and 2018 to a minimum of 4% contribution by the Employee, 3% from the employer and 1% Tax-Relief by the government. This will apply to anything earned above £5,824 to a limit of £42,385 including overtime and bonuses.

The funds will be accumulated in a Pension Pot and depending on whether it is a Pension firm, a government-backed organisation or an Insurance company that runs the scheme, each worker will be given options on how they choose to invest these funds.

There will be high risk as well as safer options to choose from. In exchange for the investment services, the pension provider will levy an annual charge which will be taken automatically from the pot.

Despite it sounding like a pay-cut, a workplace pension scheme has a bundle of advantages. Opting out should be the last thing on your mind.

Need an advisor on choosing the right retirement pension plans? Read our article, ‘How to Select a Financial Advisor’.