Introduction to Second Home Insurance
Britain is fast becoming a nation of second home owners, and sourcing insurance for a second home is not as easy as you think. There are various reasons for obtaining a second home, often a property is inherited after the death of a relative and rather than sell the property, many people decide to keep the property as somewhere to enjoy weekends and holidays. Sometimes, a second home is acquired as a property that will eventually become the main home on retirement. These properties are frequently situated in coastal areas or beauty spots and homeowners can enjoy many years of visiting the property on a part time basis before moving in on a permanent basis. This type of purchase has become so common that properties in coastal areas and beauty spots now command very high prices. On other occasions, a second home is purchased for a family member who has to work away for a while or perhaps a son or daughter that has to attend college or university. With property prices climbing away at a steady rate, this method of obtaining short term accommodation has been seen by many as preferable to renting.
Many people have acquired second homes as a means of having an annual holiday in a location they really enjoy and as a method of having a second income. Often, the property can be rented out and the income from the holiday rental periods is enough to more than pay for the mortgage. At the present moment, the government are offering favourable capital gains tax breaks on second homes that have been used as a business and an accountant will be able to explain the situation to customers. It is important to keep up with any tax changes regarding second home purchase.
When it comes to 2nd home insurance, insuring an extra property is not always that straight forward, if you approach any of the large well known insurance companies almost all of them will decline to quote on a property that is not occupied on a full time basis. This is a specialist area of the insurance market and you will have to approach a company that deals in the insurance of second or holiday homes. The majority of insurance companies shy away from providing cover for these type of properties as they do not like the prolonged periods of un-occupancy, often a second home is left unoccupied for long periods (most standard home insurance policies in the UK will allow for the property to be unoccupied for a period of up to 30 days). The problem with property that is left for a length of time are numerous, firstly, a property that is in sufficiently heated for period of time can lead to the pipes bursting in cold snap and also without anyone in occupation, it could be a fair amount of time before the property is discovered to be suffering from damage. Water peril claims including flooding are a major source of concern to insurance companies and claims can be fairly substantial.
Statistics show that unoccupied second property can also be targeted by vandals & squatters, particularly if there is evidence that no one is living in the property. The good news is that there are a number of insurers that are quite happy to provide cover for this type of property, taking a common sense approach most of the additional risks of having the property can be factored out, mainly it is common sense but the following measures will usually be sufficient to ensure you can obtain a 2nd home insurance policy.
- Arrange for a local person such as a relative or better still a neighbour to inspect the property on a regular basis, most insurance companies will insist that the period between visits is no greater than 14 days. When visiting the premises, it is important that steps are taken to keep it tidy. Also make sure any letters or free newspapers and pizza leaflets etc should be removed from the letter box areas and any waste that has accumulated around the property should be removed, the garden should be kept neat and tidy and the areas around the property free from litter. Combustible materials should not be kept near the property under any circumstance.
- The water system should be drained down and switched off at the stop-cock, this fairly simple procedure can help prevent serious damage at the property. An alternative to this, is to leave the central heating system on, this condition applies on many insurance policies between the periods 1st November and 31st March. If you are prepared to leave the central heating on in the property, remember to leave the loft hatch open as this can help any pipe work in the attic from freezing.
On obtaining your second home insurance, you will note that the perils provided are almost identical to the ones given by a standard UK home insurance policy, this is vital as if you are acquiring a mortgage to buy your property, the cover provided must satisfy the council for mortgage lenders hand book. Study, the terms and conditions closely and make sure that you are complying with all the policy terms and conditions, whilst the cover may look the same as your normal UK home insurance policy, there will be extra conditions and warranties that you must comply with for a claim to be valid. If you intend to rent out your second home, you must make sure that this fact is declared to the insurance company. They will then be able to extend the liability section of the policy to include commercial letting. This will give you protection against claims from you tenants who injure themselves or damage their property in your home and claim it is your fault.