Vacation Home: What Kind of Cover Should You Look Out For?

Owning a vacation home can be a privilege, but undeniably it comes with a price. The reasons for buying the holiday home, that is, to let out to tenants or use it exclusively for seasonal holiday residence, should be considered. Apart from the maintenance of the home, you should not overlook the need for additional insurance to protect the property.

Why is it necessary to purchase a holiday home insurance when you already have insurance for residential property? Regardless of whether you decide to use your second home as a seasonal holiday residence or rent it to holiday-makers for an agreed period of time, holiday home insurance is necessary as it provides protection against damage of the property due to external factors and loss of its contents. In this regard, it is important to bear in mind that insurance coverage for a holiday home differs from that of a conventional home, and knowing the appropriate kind of vacation home insurance cover is essential to avoid unnecessary expenses.

So what kind of cover should you look for?

In answer to this question, most holiday home insurance provides cover for the following depending on whether you intend to rent it out or to keep it as a holiday home:

The home itself

In this case, you will be compensated for repairs and rebuilding if the home is damaged.

The contents within

This means that your possessions will be protected as well as those belonging to anyone else who is staying there. These may include your refrigerator, TV, kitchen appliances, furniture, and decorations, including carpet and paintings. It is important to note that any contents in your garden shed should also be included in this cover. If you have antiques in your vacation property, it is wise to opt for the antique-for-new possibility when you insure your contents. Despite the fact that your premiums will be high for this cover, you can be rest assured that you will receive a brand new product if your antique is damaged beyond repair.

Cost needed to travel to the home for emergencies

In an emergency, you need to travel to your vacation property quickly or make repetitive visits to the property. Having the right cover for your vacation home insurance will help you get to your property without hassle.

Loss of earnings due to repairs

Over time, your 'to-let' vacation property needs repair work. If this happens, the place will be uninhabitable and hence you will face a loss of income for a period of time. Having the right cover for your vacation property will help you recover your loss of income at the time when repair work is undertaken.

Belongings proprietor liability cover

If your holiday tenant or guest is injured, or in the worse scenario, dies, because of damage within your property such as a collapsed ceiling due to a bad storm or electric shock due to bad wiring, you can protect yourself from being responsible for an incident that is beyond your control. To further protect you from legal disputes, ensure that you arrange for proper maintenance of your rental property such as having proper plumbing, roof work and electrical fittings within the home.

Protection from damage by tenants.

Tenants tend to be less careful in their treatment of their rental properties than owners, so it is advisable to purchase cover that protects you from damage caused by them.

Cover for natural disasters

This ensures that you are financially covered if your vacation home is damaged by natural disasters like hurricane and flood. This is an especially important area to look into if your vacation property is located in cyclone or flood prone areas.

Rental loss cover

This type of cover is different from cover for natural disasters in the sense that it covers any rental loss as a result of a natural disaster such as flooding or a bad storm until your home is repaired and is considered safe for tenants to move in.

Factors to consider before you select the right home vacation cover

  • Examine carefully the areas that need to be covered

  • Consider the location of the property - coastal versus inland

  • Have a budget in mind that you intend to stick to

  • Compare prices, coverage, and the insurance company's overall reputation

  • Clarify doubts by asking plenty of relevant questions

Having a vacation home is indeed a luxury. Extra expenses are needed to be channelled into maintenance and insurance, as you want your real estate asset to be looked after. Before buying insurance, consider the reputation of your insurers, compare quotes from different insurers, assess the inclusions and exclusions in your policy and consider the right coverage for your vacation property.