Is your short let properly insured?

Why your current policy probably falls short

Home insurance is priced for a household living in its own home. A long-let landlord policy is priced for one tenant on a tenancy. A short let is neither: new guests every few nights, door codes changing hands, and the home earning money as a business. To an insurer that is a different risk, and most standard policies say so in the small print.

A home or long-let policy will often contain one or more of these:

• An exclusion or condition for business use, or for letting to paying guests.
• No cover for theft without a break-in, which rarely fits a guest given the door code.
• No cover for malicious damage by someone you let in.
• Liability cover written for a private homeowner, not someone running a let.
• Rent and legal cover that depends on a tenancy, which a guest does not have.

Some home insurers sell an add-on for occasional home sharing, which can suit an owner who lets a few weeks a year. For a home let through the year, specialist short-let or holiday-let insurance is built for the job, and it is what we recommend.

Telling your insurer, and what the law says

Two Acts set out what you must tell an insurer. Which one applies depends on why you are buying the policy, and both apply across the UK.

If you let a property to earn income, expect to be treated as a business. The Financial Ombudsman Service, which settles complaints about insurers, has treated landlords’ property owner policies as non-consumer contracts under the 2015 Act. Paying guests are plainly something a prudent insurer would want to know about.

The consequences are much the same under both Acts. They turn on whether you were deliberate or reckless, or just careless, and on what the insurer would have done had it known.

Remedies under Schedule 1 of each Act. It is for the insurer to show that a breach was deliberate or reckless.

The last row catches people out. In the Ombudsman’s own example, if you paid two-thirds of the premium you should have, expect two-thirds of the claim. On a fire or flood, the missing third is a lot of money.

Even where the law does not make you report a change partway through a policy year, the policy wording still decides what is covered, and most home policies restrict cover while the home is let to paying guests. Tell the insurer in writing before the first guest arrives, and keep the reply.

What specialist short-let insurance covers

Specialist policies start from the fact that the home is let to paying guests. Cover differs between insurers, so use this as the list to check a quote against.

• Buildings
• Contents, including guest-use items
• Accidental damage by guests
• Malicious damage by guests
• Public liability
• Employers’ liability, if needed
• Loss of income after damage
• Legal expenses

Buildings cover pays to repair or rebuild after fire, flood, storm or escape of water. Contents cover should include the furniture, linen and kitchen kit guests use. Accidental and malicious damage by guests is the cover a home policy most often leaves out.

Public liability pays if a guest or a member of the public is injured, or their belongings damaged, and you are found legally responsible: a guest who trips on a loose stair carpet, say. Check the limit, and that it applies whichever site the booking came from.

Employers’ liability is a legal requirement once you employ staff, such as a cleaner on your own payroll. In England, Scotland and Wales it must cover at least £5 million, and an employer can be fined £2,500 for every day without it. Northern Ireland has its own, similar rules. Employing only a close family member can be exempt, though not if your business is a limited company, and if your cleaners are employed by a cleaning company or a manager, the duty sits with that employer. Ask your insurer to confirm where you stand.

Loss of income cover pays for bookings you lose while the home cannot be let after an insured event, such as a kitchen fire or a burst pipe. It does not cover a quiet month. Legal expenses cover helps with disputes, with a guest or a contractor for example, up to a limit.

Exclusions and conditions to read closely

A condition is something you must do for cover to apply; break it and a claim can be cut or refused. Exclusions are what the policy will not pay for at all. These matter most for a short let.

Common terms in UK short-let and holiday-let policies. Wording and limits vary, so read your own policy.

Keep evidence: dated photos at each changeover, cleaners’ reports and receipts. In the homes we run, every guest gives photo ID, signs a rental agreement and pays a damage deposit or damage waiver before check-in, and two lock boxes cover lockouts. Our guides to fire safety and gas and electrical checks cover the certificates.

Airbnb and Booking.com protection is not home insurance

Both big platforms give hosts some protection at no extra cost. It helps, but it was never meant to insure your home, and it only applies to bookings made on that platform.

Airbnb’s AirCover for Hosts has two parts. Host damage protection reimburses certain guest damage, extra cleaning such as smoke smells, and Airbnb income lost if you cancel because of guest damage. You must ask the guest to pay first and file within 14 days of checkout. It excludes wear and tear, acts of nature and lost cash, and Airbnb says it is not insurance and not a substitute for your own. Host liability insurance, underwritten by Zurich for UK hosts, covers up to $1 million if you are found legally responsible for a guest’s injury or damaged belongings.

Booking.com’s Partner Liability Insurance covers claims for injury or damage to other people’s property during a Booking.com stay, up to £1 million for UK homes. It does not cover damage to your own property or contents: a guest who breaks your television is not covered by it.

Most managed homes are listed on several sites, so platform cover is patchy by design, and direct bookings get none of it. Treat the platforms’ schemes as a backstop and your own policy as the main cover. When something is damaged in a home we run, we arrange the repair and handle the claim, whichever route it takes. See our guide on when a guest damages your home.

Flats: the block policy and your own cover

In a leasehold flat, the building is usually insured under one block policy arranged by the freeholder or managing agent, paid for through the service charge. It covers the structure, not your contents, your liability to guests or your lost bookings, so you still need your own short-let policy for those.

Short lets can affect the block policy too. A block insurer may want to know if flats are let to paying guests, and an undisclosed change of use can put cover at risk for the whole building. Your lease may also need consent for short lets or ban them. Check the lease, tell the managing agent and ask whether the block insurer knows. Our guide to leasehold flats and short lets covers the lease side.

What to ask an insurer or broker

Describe the let exactly as it runs: roughly how many nights a year, which sites, who manages it, how guests are checked, how keys are handed over and who cleans. Then ask these questions, and get the answers in writing.

1. Is the policy written for short lets?Paying guests should be expected, not merely tolerated.
2. Does it cover every booking source?Every platform you use, plus direct bookings.
3. Are theft and malicious damage by guests covered?This is the gap most home policies leave.
4. What counts as unoccupied?How many empty days in a row are allowed, and what changes after that.
5. Which conditions must I meet?Key safes, ID checks, alarms, certificates: list each one.
6. What are the limits and excesses?For public liability, contents and loss of income.
7. How is loss of income worked out?On past bookings, a forecast or a fixed sum, and for how long.
8. Do I need employers’ liability?It depends on who employs your cleaners.

Check the insurer or broker is on the FCA Register, and ask a broker how they are paid. If a claim is turned down and you disagree, complain to the insurer first; if that fails, many individual landlords and small businesses can take it to the Financial Ombudsman Service for free. Our guide to running costs, line by line shows where insurance sits among your other costs.

Questions owners ask