Why do I need holiday home insurance?

The level of insurance coverage you may need for your holiday home often depends on how you plan to use it. For instance, a standard homeowner's insurance policy might not safeguard you against tenant damage. On the other hand, while landlord insurance can cover tenant-related issues, it often applies to longer-term rentals, usually exceeding 90 days. 

We've explored two potential ways in which you might use your holiday home and how your insurance needs may vary in each situation.

You plan on using the holiday home as your own place

If you have a holiday home that you keep for vacations and weekend getaways, you will want to ensure it's well taken care of, both during your stay and when you're not around. For that, you'll need to purchase a home and contents insurance cover that works similarly to how it would for your residential home.

However, there’s one big difference between insuring your home and a holiday house. When you don’t stay in a property and don’t visit it for a long time, most insurers consider it to be unoccupied. In this scenario, the insurer might either make you pay an additional excess (if you are making a claim) or cancel your policy.

A house is generally considered to be unoccupied if it lies vacant for 60 days, but each insurer can have different guidelines for this, so it’s important that you check this point while finalising your holiday home insurance. You can find this information in the insurer’s Product Disclosure Statement so remember to read it carefully and check with your insurer if it’s possible to extend this period if needed. They may agree to your request but charge you a higher premium or excess for that period. 

As a policyholder, it is also important to be aware of any additional restrictions or exceptions in your policy. For instance, your insurer is unlikely to cover you for any damage caused by regular wear or tear or your failure to maintain the house properly. Many insurers require you to carry out regular home inspections and not keeping on top of repairs and maintenance could lead to your insurance getting void. 

Your insurer is also unlikely to provide coverage for any modifications or renovations that alter the structure of your home. For example, if you add a swimming pool to the property without informing your insurer, it's unlikely that your insurance will extend to cover the pool.

You plan to rent out your holiday home

Purchasing a standard home insurance policy may be enough if you plan to keep your holiday home for personal use. However, if you are renting out your holiday home, it is worth checking with your insurer whether they’ll cover your property against damage if it is occupied by somebody other than you and your family members who ordinarily reside with you. Further, it’s also worth checking if your home insurance policy protects you against damage caused by tenants and their guests. 

In general, it’s unlikely for a standard home and contents insurance policy to provide comprehensive coverage against tenant-related damage. If you’re planning to rent out your holiday home and are looking to insure it, you may want to consider an insurance product designed specifically for landlords. 

Landlord insurance offers protection for your property and its contents. It also safeguards you from potential tenant-caused damage. However, landlord insurance is generally available for properties that are rented out for 90 days or more at a time. If you’re looking at letting out your home for short stays, you may need to check with your insurer for a policy that specifically offers coverage for short term rentals, like AirBnB and Stayz.

However, keep in mind that all insurance policies are different and it helps to know what you’re looking for. Whether it is liability insurance you are after or protection from tenant damage, having a list of the potential threats to your property could help you compare insurance products confidently. Remember, the devil is in the details. So, be sure to thoroughly read the terms and conditions to understand the exact nature of the coverage offered by an insurer before making your choice. 

If your holiday home is not an independent house but an apartment, you might not need building insurance. Apartments, townhouses, villas and similar strata units may have different insurance arrangements. 

Generally, such properties are already insured by the strata corporation. So, if the property is damaged due to natural disasters and the like, it should be covered. For added peace of mind, you may also want to consider contents insurance to protect your possessions inside the apartment. 

But keep in mind that strata insurance may not be enough if you plan to let out your property to holiday makers, as it is unlikely to cover tenant related damage. If you’re concerned about the damage caused to your property by guests, it may be worth considering a landlords insurance policy.