What Insurance Do You Need for a Holiday Let?

Why won’t a standard landlord policy cover a holiday let?

Because a landlord policy is priced for one household on a tenancy of six months or more. Holiday letting changes the occupancy, the turnover and the liability exposure, and most residential wordings exclude it outright.

What occupancy means to an underwriter

Insurers rate residential lets on a settled occupant with a tenancy agreement and a protected deposit. A let property policy assumes the same people will be in the house next month, which is the opposite of a changeover every week.

Holiday guests have no tenancy, no reference check and no deposit scheme behind them. That difference alone moves the property into a commercial class.

What happens when you claim on the wrong policy

The insurer asks who was in the property when the damage happened. Answer ‘a paying guest’ on a residential wording and the claim is declined, because occupancy is a material fact under the Consumer Insurance (Disclosure and Representations) Act 2012.

The ABI treats a change of use as something you tell your insurer about the day it happens, not at renewal. A voided policy then has to be declared on every proposal form you complete afterwards.

Which covers belong in a holiday let policy?

Buildings, contents and public liability form the core, with loss of bookings income and employers’ liability added according to how you run the place. Most specialist insurers sell the lot as one contract rather than four separate policies.

The three sections you cannot skip

Buildings cover insures the structure, the fitted kitchen and the boiler on a rebuild basis. Rebuild cost sits well below the sale price, so quoting the market value is the most common way owners overpay.

Contents cover stretches further in a holiday let than in a tenancy, because you supply the beds, the crockery and the televisions. Insure the full replacement cost of everything a guest can pick up or sit on.

Public liability pays compensation and legal costs when a guest is hurt at your property. It is the cheapest section on the schedule and the one with the largest possible claim.

The extras worth paying for

• Loss of bookings income replaces the revenue you lose while the property is uninhabitable, usually for 12 to 24 months.
• Accidental damage covers the one-off guest mishap, from red wine on a cream sofa to a cracked induction hob.
• Employers’ liability becomes compulsory the moment your cleaner counts as an employee rather than a contractor.
• Emergency assistance gets a heating engineer out at 9pm on a Saturday when a family has just arrived to a cold house.

How much public liability cover do booking platforms expect?

£2 million is the practical floor and £5 million is what most letting agencies now ask to see before they will market your property. In Scotland it stops being optional at all, because public liability cover is a condition of your short-term let licence.

What the agencies and platforms ask for

Cottage agencies that market and book on your behalf usually make £2 million to £5 million of public liability insurance a condition of listing. Several ask to see the certificate before your first booking goes live.

Airbnb and Booking.com do not police a limit the same way, and their host protections sit on top of your own cover rather than in place of it. Take direct bookings and nobody is checking at all.

Why Scotland makes it a licence condition

Schedule 3 of the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 requires valid buildings insurance for the licence period and valid public liability insurance for the duration of every let agreement. Operating an unlicensed short-term let in Scotland is a criminal offence.

The same licence conditions cover gas safety, five-yearly electrical inspection and a legionella risk assessment, which matters most if you have a hot tub. Specialist insurers ask for the same paperwork wherever the property sits.

Do you need employers’ liability insurance for a cleaner?

If your cleaner or changeover team works only for you, on your rota and with your equipment, the law treats them as an employee and employers’ liability insurance is compulsory. The statutory minimum is £5 million and the penalty for going without is up to £2,500 for every day you are uninsured.

Employed or genuinely self-employed

The Health and Safety Executive looks at the working relationship, not the wording on the invoice. Somebody who cleans for a dozen owners, sets their own hours and brings their own kit is genuinely self-employed and carries their own cleaning insurance.

Somebody who cleans only your cottage, on the days you set, using the vacuum in your cupboard, looks like an employee. Casual, part-time and seasonal helpers count, and so do family members once the business is a limited company.

What the fines look like

Most insurers write £10 million as standard rather than the statutory £5 million, and it is one of the cheapest sections you will buy. The difference between employers’ liability and public liability is simply who is bringing the claim: your staff or your guests.

Failing to display the certificate where staff can read it is a separate offence carrying a fine of up to £1,000.

Does airbnb’s aircover replace a holiday let policy?

No. AirCover for Hosts gives you up to $3 million of host damage protection and up to $1 million of host liability insurance, but only the liability half is insurance and both apply solely to bookings made through Airbnb.

What aircover pays

Host damage protection is a guarantee from Airbnb rather than a policy you hold, and it reimburses guest-caused damage to your property. Host liability insurance responds if a guest is injured during a stay.

It is a useful backstop on platform bookings, which is why Airbnb insurance is bought alongside AirCover rather than instead of it. Airbnb itself tells hosts to keep their own cover in place.

The gaps it leaves

Every claim outside an Airbnb reservation falls back on your own policy, including the direct bookings most owners come to rely on.

What do the 2025 tax changes mean for holiday let owners in 2026?

The Furnished Holiday Lettings regime was abolished on 6 April 2025, so your holiday let is now taxed as part of an ordinary UK property business. Your insurance premiums remain fully deductible against rental income, which is one of the few reliefs the change left alone.

What went in april 2025

According to HMRC’s guidance on working out your rental income, former holiday lets are treated in line with all other property income and gains. Mortgage interest relief is restricted to a 20% basic rate tax credit instead of a deduction.

Capital allowances on new furniture have gone, replaced by replacement of domestic items relief. Business Asset Disposal Relief, rollover relief and gift relief no longer apply on sale, and profits no longer count as relevant earnings for pension contributions.

What still reduces your bill

Insurance premiums, agency commission, cleaning, laundry, utilities and repairs all remain allowable expenses. Keep the policy schedule with your records, because the premium is one of the larger deductions on a well-run holiday let.

Losses now pool with the rest of your property business rather than sitting in a separate holiday letting pot. That helps owners who hold a buy-to-let alongside the cottage.

Will your holiday let pay business rates or council tax?

It depends on how many nights the property is available and how many nights it is genuinely let, and the thresholds differ across England, Wales and Scotland. Cross them and you move onto non-domestic rates, where small business rate relief can wipe the bill out entirely.

The letting-day thresholds

The English test comes from the government’s guidance on applying for business rates for a self-catering property, and the Valuation Office Agency checks your booking records against it. Fail it and the property drops back onto council tax at the domestic rate.

Wales sets the bar far higher at 252 nights available and 182 let, which many rural cottages miss after a poor season. Scotland uses the same 140 and 70 night test as England, measured across the financial year.

Why the rating status changes your cover

Once the property is on the rating list, insurers expect a commercial holiday let wording rather than a domestic one. Declaring it as a second home when the Valuation Office has it rated as a business is a mismatch that surfaces at claim stage.

Push further into cooked breakfasts, daily housekeeping or a licensed bar and you leave holiday let cover altogether for hotel and guest house insurance. The line falls roughly where you start providing services rather than just the keys.

What will a holiday let policy refuse to pay for?

Wear and tear, anything you failed to declare, and the property standing empty for longer than the wording allows. Hot tubs, swimming pools and wood burners are the three features most likely to carry a condition you have to meet.

The exclusions that catch owners out

Read the letting conditions as carefully as the list of perils. Most declined claims come down to a night limit, a guest limit or a hot tub condition.

The empty weeks between bookings

Most policies restrict cover once the property has stood empty for 30 to 60 consecutive days, which is easy to hit over a coastal winter. Longer closures need unoccupied property cover or an extension agreed in writing.

During a void, cover usually drops back to fire, lightning, explosion and aircraft. Frozen pipes are the risk that bites hardest, so drain the system and leave the heating on a frost setting.

How much does holiday let insurance cost and how do you buy it?

Most owners pay between £300 and £1,500 a year, with a two-bedroom cottage near the bottom and a large property with a hot tub and a pool near the top. Specialist insurers price it better than general home insurers because they understand the letting pattern.

What drives the premium

• Rebuild cost and location do most of the work, with flood and coastal exposure the biggest loading.
• Guest capacity matters, because a property sleeping ten is rated differently from one sleeping four.
• Hot tubs, pools, trampolines and wood burners each attract a condition or an extra premium.

Raising the excess and paying annually rather than monthly are the two levers that move the price most. Our guide to what landlord insurance costs explains the same mechanics on a residential let.

What to check before you buy

• The maximum letting nights per year, and whether bookings are unlimited.
• The maximum guests per booking, which often caps at eight or ten.
• The unoccupancy clause and how many consecutive empty days it allows.
• The maximum length of a single stay, since 31 nights or more can fall outside a holiday let wording.

Take three quotes and compare the letting conditions rather than the headline price. An insurance broker earns their keep if the property is thatched, listed or sleeps more than ten.