Holiday home insurance

If you own a holiday home, your insurance options fall into two categories: one for renting the property out, and another for personal use only. If it’s just for you, home and contents insurance is what you’re after. 

If you’re renting it out, you need to look into landlord insurance, or for short-term rentals like Airbnb, explore short-stay coverage options.

Let’s look at these more closely.

If your holiday home is just for you and your family, home and contents insurance is usually the way to go. It covers your place and everything in it from things like theft, fires and bad weather.

Just a heads-up: insurers know that an empty holiday home carries more risk. So, if it's left vacant for over 60 days, it could impact your insurance. Not informing your insurer about lengthy breaks might lead to a lack of coverage or issues with claims.

In cases where your insurer does cover extended periods of vacancy, they might require you to maintain the home's lived-in appearance. This means regular chores like lawn mowing, mail collection and general tidying are necessary. It's not only about keeping the place neat; these steps also help deter potential thieves by not signalling an empty property.

If you're not around to do these things, you might need to get someone local to help out. Making sure these tasks are done is super important to stick to your insurance agreement and keep your holiday home properly protected.

Holiday home insurance ensures protection for your cherished getaway spot, offering coverage for the following situations:

• Damage from storms, heavy rainfall, fire, lightning strikes, earthquakes or tsunamis
• Damage from floods (usually an optional add-on)
• Theft and damage from break-ins or attempted break-ins
• Water damage from leaks or burst pipes
• Sudden impact (eg, falling tree, out-of-control vehicle)
• Vandalism and other malicious damage
• Damage from earthquake or tsunami

The follow items can be protected based on your level of cover:

• Your home’s structure
• Glass and other fixtures
• Furniture and furnishings
• Kitchenware
• Computers and other electronics
• Electrical appliances
• Clothing
• Other personal items like jewellery and sunglasses
• Curtains, blinds, rugs and carpets

When considering home insurance for your holiday home, it's just as important to understand what isn't covered as what is. Here are some key exclusions:

• You’re renting out the place. If you’re renting out your home to someone else, typical home and contents insurance won’t suffice. You’ll need landlord insurance or short-stay insurance instead. 
• Long periods of vacancy. Many insurers will void your cover if it’s been vacant for 60 days or more unless you tell them first, since vacant houses can attract crime. So make sure to let your insurer know if it will be vacant for extended periods.
• Not maintaining the place. Regular maintenance is key for your holiday home. Expect to handle routine fixes, like patching up holes or fixing leaks, as insurers consider these tasks part of standard upkeep and wear and tear. If you fail to do this, you might find you’re not covered when these small issues turn into bigger ones.
• Renovations. You won’t automatically be covered for an increase in holiday home value due to renovations unless you tell your insurer about it and adjust your cover to reflect the increase in value.

If you’re planning on renting out your property normal home and contents insurance won’t cut it, so you’ll need one of the following:

• Landlord insurance. For those renting out the unit for more than 90 days at a time. It typically covers risks associated with leasing, such as property damage, loss of rental income and liability protection. 
• Holiday rental insurance. For those renting out their unit for shorter periods, such as through Airbnb or Stayz. It’s basically the same thing as landlord insurance but tailored specifically for short-term rental scenarios.

These both work the same way and provide extra protection that one might need as a landlord, including:

• Damage to the property, both intentional and accidental, by tenants or their visitors.
• Damages to furnishings and appliances provided for guest use.
• Theft committed by tenants or their guests.
• Compensation for lost rent due to a variety of circumstances including a tenant's failure to pay, if tenant damage renders the property uninhabitable, or when external factors make the property inaccessible or unrentable.
• Costs for replacing keys and locks when a tenant fails to return them.
• Legal costs associated with tenant disputes or actions.
• Liability coverage for incidents where guests are injured or suffer property damage while on the premises.

Typical exclusions for landlord and short-term rental insurance policies include:

• Stays of 90 days or longer unless it’s agreed to by the insurer or you have specialised holiday rental insurance
• General wear and tear
• Damage from rust, mould, or mildew, except when it directly results from a covered event and the issue was not pre-existing.
• Loss or damage caused by insects, rodents or other vermin.
• Damage caused by tenants undertaking activities or making alterations with your prior permission.
• Keys provided for property inspections.

For a complete understanding of all exclusions, it's important to review your Product Disclosure Statement (PDS). This will provide you with a detailed list specific to your policy.

If you have a mortgage on the home, you may not have a choice, since it's often a requirement by the lender. But it’s a good idea regardless. 

Vacant homes are more likely than inhabited ones to be targeted for break-ins. Additionally, holiday homes tend to be located in areas where natural risks like bushfires and falling trees are prevalent. 

And if you’re renting the place, landlord insurance and short-term rental insurance is essential in protecting you against damages by tenants.

Purchasing holiday home insurance expenses doesn't have to be a huge hit to your pocketbook. Here are a few tips to help you reduce your premiums:

• Opt for a higher excess. You can reduce your premium by increasing your excess. Just ensure the excess is still affordable for you because it means you'll pay more out of pocket if you ever have to make a claim.

• Consider location-specific risks. If your holiday home is in an area prone to natural disasters, it can pay, in the form of lower premiums, to implement protective measures. For example, if bushfires are common, using fire-resistant materials and clearances can reduce insurance costs.
• Install security measures. If you bolster your holiday home’s security with alarms, CCTV or strong locks, you can significantly lower the risk of theft and break-ins. Insurers love this and will potentially reduce your premiums as a result.
• Combine policies. Many insurers offer discounts for multiple policies, like combining your home insurance and car insurance policies. See if you can include your holiday home insurance for added savings. 

• Regularly review your policy. As your holiday home's circumstances change, so do your insurance needs. Review your policy once a year to ensure it still fits your requirements; adjust where necessary and limit overinsurance.
• Limit unnecessary add-ons. Avoid paying for extra coverage that isn't relevant to your holiday home's location or use. For example if you don’t live in a flood zone, flood cover is probably not necessary.
• Shop around. Don't hesitate to shop around and compare different insurers and policies. Prices and coverage can vary from one provider to the next, so getting multiple quotes can often pay dividends.
• Negotiate with insurers. Use quotes and info from other providers as leverage to negotiate better rates with your current insurer. Demonstrating loyalty and a good claims history can also be a bargaining chip.
• Check for discounts. Always ask your insurer about any available discounts, such as for seniors, long-term customers, or early payment of premiums.

Implementing these tips can help you significantly reduce the cost of your holiday home insurance while ensuring adequate protection for your property.

Cover for accidents varies depending on whether the policy is for personal use (home and contents insurance) or for a rental property (landlord insurance).

• Home and contents insurance for personal use. Standard cover often doesn't automatically cover accidents, but you can usually add accidental damage cover to your policy as an add-on. This will cover unexpected events like a broken window or a spill damaging your carpet.
• Landlord insurance for rental properties. If you're renting out your holiday home, landlord and holiday rental insurance generally includes coverage for accidental damage caused by tenants since it’s designed to offer a broader range of protections in a rental scenario.

In both cases, it’s important to review the details of your policy in your PDS and speak with your insurance provider to understand the full scope of your coverage. 

Extended vacancies can alter the risk profile of your property, and by extension, the terms and conditions of your policy. To ensure your property stays protected, you’ll need to take specific steps and understand your policy's stipulations regarding unoccupied homes. 

Here’s what you need to do:

1. Notify your insurer. Most insurers require you to inform them if your home will be vacant for a certain period, usually 60 days or more. Failing to inform them can result in reduced cover or could even void your policy.
2. Review policy conditions. Check your policy for specific conditions related to extended vacancies. Some policies may have special requirements like notifying your insurer, maintaining the premises, and/or paying an additional excess for any claims related to damages that occurred during the unoccupied period.
3. Maintain your property. To reduce risks and adhere to insurance requirements, maintain your property even when it's unoccupied. This includes securing the property, regular inspections and upkeep like lawn maintenance and mail collection. This reduces the risk of break-in and is often a requirement for cover during unoccupied periods.
4. Take preventative measures. Make your home appear occupied by using light timers and arranging for someone to check on the property regularly. This can help deter potential burglaries and vandalism.
5. Understand policy exclusions. Be clear on what your policy excludes during extended vacancies. Some policies might not cover certain types of damage, like from burst pipes, if the home is unoccupied.

By taking these steps, you can help ensure that your holiday home remains protected under your insurance policy, even when it’s unoccupied for long periods.

If you have a holiday home, you definitely want to consider insurance, whether you’re renting it out or keeping it all to yourself. Just remember that your insurance needs will differ - so act accordingly and protect your holiday home so you can enjoy it for years to come! 

If you have a holiday home and aren’t renting it out, try one of these home and contents insurance policies on for size.