Whether you have a second property at home or overseas, it is vital that you choose the right insurance policy to cover the costs. Knowing which policy is best suited to your second property will depend on a number of factors such as whether or not the property is empty for long periods, as many second homes can be, but by knowing how to cover the costs of any potential damage, owning a second home can ultimately lead to extra money and a better lifestyle overall.
Whatever purpose you use your second property for, it’s absolutely essential that you take out a more substantial plan than standard home insurance. This is because the terms and conditions relating to second property insurance are more complicated, and if you aren’t living in that property on a full-time basis and fail to explain this to the insurance providers, the plan you take out may be invalid. Therefore, if you ever need to make a claim, the insurer might refuse to pay any money out.
A second home is one which is not your main residence and the home insurance needed for this type of property is almost identical to that required for your main home. However, to choose the most appropriate contents and building cover, consider the occupancy requirement of the home, friends and family usage and whether or not you will have lodgers or permanent guests. For both homes, you should have contents and home emergency cover.
Deciding on your ‘main residence.’
If you have two properties, the first step to taking out home insurance is choosing which one of them will be classed as your main residence. From a legal perspective, your main residence will be treated differently from your second home, but this doesn’t necessarily mean you always have to be physically present at that address. Instead, a number of elements will be taken into account including:
- Whether you live at that property for the majority of the time
- The legal ties you have to this address
- The property in which most of your possessions are kept
- Where your family spends most of their time
You can nominate a property as your main residence by writing to HM Revenue and Customs (HMRC) which will allow you to qualify for relief for most of the time you live away but you must have at some point lived in that property as your only home during the time you have owned it.
There are a variety of different reasons why a person may opt to have a second home for example holiday lets, holiday homes and rentals. To most people, all of these may seem relatively similar, but it is important to accurately define the difference between the four to know which insurance plan will best suit you.
If you own a second property abroad or in another part of the UK to where you usually reside, the likelihood is that you’ll advertise this to be let by others during the time that you’re not there. For this type of insurance, you need to check that you cover the extra risks that come with a third party using your property and you always need to make sure the legal implications if anything were to go wrong. Even if it is your plan to rent your second property for only one weekend of the year, you must always let your insurance provider know this so that they can account for the specialist cover you will need. Depending on your circumstances, factors you may need to look out for include:
- Legal insurance
- Personal injury
- Employer’s liability
- Accidental damage
- Emergency home cover
- Maintenance costs
Many second homeowners in the UK have purchased another property for the purpose of using it as a holiday home. The main difference between a holiday home and a holiday let (above) is that a holiday home is never used for commercial purpose. In other words, no one will ever pay you money to use it. It is, therefore, appropriate to approach home insurance for a holiday home the same way as you would for your main residence, but you should always still inform your insurer that it is a holiday home and make them aware that there will be certain times when the property will not be occupied. This will allow your insurance provider to adjust their policies accordingly. It’s also worth noting that the insurance will not cover anything that goes wrong with anyone that uses the property while you’re not there unless they are immediate family or their names have been stipulated otherwise.
This type of second property refers to those that are rented out on a more permanent basis, and they are becoming more popular with second home buyers in the UK who are looking for a way to make additional money. Additionally, many people require rental insurance if they choose to move in with a partner and rent out their own property or if the property was inherited. This type of insurance is often known as ‘landlord insurance’, and you should, therefore, approach it with this mindset, looking for a policy that will cover:
- Loss of rent
- Landlord contents
- Legal cover
- Accidental damage
- Alternative accommodation
- Lock replacement