Start with the blunt part. A standard home insurance policy, and most buy-to-let landlord policies, will not cover a property let to paying guests. The moment money changes hands for a night’s stay you are running a small hospitality business out of a residential building, and the policy you had before was not written for that. Worse, letting without telling your insurer can void the whole policy, not just the guest-related part of it. A kitchen fire in February, with the flat empty for weeks, can still be declined because you changed the risk and did not disclose it.
So the first job is not choosing a policy. It is telling your current insurer plainly what you now intend to do with the property. After that you need a specialist holiday let policy, arranged through a broker who writes this class of business. Here is what one is made of.
Why your existing policy almost certainly does not fit
Insurance is priced against a described risk. Home insurance assumes you live there. Buy-to-let cover assumes one household in occupation for months under a tenancy, keys handed over once. A holiday let breaks both assumptions. Strangers arrive every few days, cook in a kitchen they do not know, use an unfamiliar shower, leave, and someone else arrives that afternoon.
That turnover is what insurers care about. It changes the odds on an escape of water, an accidental fire, a slip on a wet floor, and a liability claim brought by somebody who is not you. The material fact is not “I own a flat”, it is “I let a flat to paying guests”, and an undisclosed material fact is the usual reason a claim gets refused.
The categories of cover to think about
You do not need to become an underwriter. You do need the names of the things you are buying, so a quote with a hole in it is obvious to you.
| Cover | What it is for | The trap |
|---|---|---|
| Buildings | Repairing the structure after fire, storm, flood, escape of water | Sum insured is rebuild cost, not market value. On a flat, the freeholder’s block policy may apply instead |
| Contents | Furniture, appliances, beds, kitchenware, soft furnishings | Standard wordings frequently exclude damage caused by paying guests |
| Public liability | A guest, neighbour or visitor injured, or their property damaged, and they claim against you | Limits vary widely. Channels and agents often expect a stated minimum |
| Employers’ liability | Anyone who is legally your employee working at the property | Whether it applies turns on the working relationship, not the job title |
| Loss of income | Bookings lost because an insured event made the place unlettable | How the payout is calculated, and for how long, differs enormously |
| Accidental damage | The guest who cracks the hob, drops the television, stains the sofa | Usually an add-on, usually capped, usually with an excess per incident |
| Malicious damage by guests | Deliberate damage, including a party that gets out of hand | Frequently excluded outright, or granted only with conditions attached |
Buildings and contents
Buildings cover puts the structure back. Insure it for rebuild cost, not what an estate agent thinks the flat is worth. If you own a leasehold apartment the block is usually insured by the freeholder and your share arrives inside the service charge. That does not mean you are covered. Ask the managing agent, in writing, whether the block policy permits short letting at all. Many do not.
Contents is where the surprises live. A great many contents wordings quietly exclude damage caused by paying guests, so read for that exact exclusion. Then value the contents honestly: a well-specified apartment holds more than owners remember once you count beds, appliances, the television, crockery and linen stock. Keep the invoices. The schedule you build when furnishing the property properly is what an insurer asks for after a claim.
Public liability
This is the cover for the day something goes seriously wrong. A guest slips on a wet bathroom floor. A balcony rail gives way. Claims of that kind are rare and expensive, which is exactly the shape of risk insurance exists for. Policies state a limit of indemnity, and some channels and management agreements require a stated minimum, so check what yours asks for before you sign. Liability cover is also why gas, electrical and fire safety paperwork matters beyond the tick-box. Insurers ask about it, and compliance, safety and licensing is the file they will want to see if a claim is brought.
Employers’ liability
If someone is legally your employee and works at the property, employers’ liability is a statutory matter, not an optional extra. Whether it bites depends on the real relationship, not the label on the invoice. Cleaning, linen, laundry and maintenance for FSM-managed properties are delivered by a vetted network of independent local partners who carry their own cover, and we coordinate them. That is a different arrangement from putting a cleaner on your own payroll. Either way, do not decide you are exempt on your own reading.
Loss of income, and the number you put in the box
Loss of income cover, sometimes called business interruption, pays out when an insured event makes the property unlettable and the bookings fall away. A flood in November can take a flat off the market until spring.
The awkward part is the sum insured. Claim a fantasy figure and you pay for cover you cannot use. Understate it and you are underinsured when it counts. Use something defensible: a realistic nightly rate against realistic annual occupancy, not your best August week annualised. The Bournemouth earnings guide sets out the indicative model behind that sum, and the month-by-month occupancy picture shows why the answer depends on which months you lose. Both are indicative models, not measured results for your property, so refine them once you have a season of your own booking data.
Accidental and malicious damage
Insurers treat these two very differently. Accidental damage is the guest who breaks something without meaning to: the cracked induction hob, red wine on a pale sofa, the shower screen. It tends to be an optional extension, capped, with an excess that makes small claims not worth making. Most owners absorb the small stuff and keep insurance for the serious stuff.
Malicious damage by guests is the party that turns. Many policies exclude it flatly. Where it is offered, conditions come with it: minimum stay lengths, occupancy limits, guest verification, no local bookings. Those conditions are not decoration. Break one and you have no cover, which is the strongest practical argument there is for screening guests and setting sensible minimum stays through disciplined guest communication and check-in.
Platform protection schemes are not insurance
Airbnb, Booking.com and others run host protection or damage guarantee programmes. They are useful. They are not insurance, and they should never be the thing standing between you and a serious loss. They apply only to bookings made through that platform, so a direct booking or a stay taken elsewhere falls outside. They carry their own limits, exclusions, evidence requirements and time bars, all set by the platform and changeable by the platform. They are not regulated insurance contracts either, so your recourse if a decision goes against you is not the recourse a policy gives you. Read them as a top-up on a real policy. If your distribution runs across several channels plus direct bookings, the gaps between the schemes are where an uninsured loss hides.
What your insurer will want to know
Have these answers ready before you ask for a quote. Getting one of them wrong is how a policy fails later.
- The letting type. Holiday let, short let, serviced accommodation, or a mix. Say precisely what you do.
- Maximum occupancy. How many can sleep there, sofa beds included. Overselling capacity to guests while understating it to your insurer is a bad combination.
- Minimum stay. One-night stays are viewed differently from a three-night minimum, and malicious damage cover can hang on it.
- Whether you use a managing agent. Who holds the keys, who inspects the property, who responds when something breaks at midnight.
- Unoccupied periods. How long the place sits empty in the shoulder season. Most policies carry an unoccupancy clause with a day limit.
- Safety compliance. Gas certificate, electrical condition report, smoke and carbon monoxide alarms, fire risk assessment.
- Any letting to contractors, companies or a local authority. Separate risks, often rated separately.
Your mortgage and your lease can override all of it
Insurance is not the only contract governing what you may do with the building. A residential mortgage usually prohibits letting without consent. A buy-to-let mortgage typically contemplates an assured shorthold tenancy, and short-term letting may breach its terms even though you are, in the everyday sense, letting the place out. Lenders can impose conditions, charge fees, or refuse.
A lease on a flat can prohibit short lets outright, restrict use to a single private dwelling, or require the leaseholder to be in occupation, and freeholders have grown readier to enforce those clauses. Separately again there is the planning and registration position, which has been moving: our guide to planning permission and licensing for short lets in Bournemouth covers where that currently stands.
Questions worth putting to a broker
Take this list to the call. A broker who writes holiday let business will answer all of it without hesitating.
- Does this wording cover damage caused by paying guests, and where does it say so?
- Is malicious damage by guests included, excluded, or available as an extension, and on what conditions?
- What is the unoccupancy limit, and what must I do to the property once it is exceeded?
- What limit of public liability does this carry, and can it be increased?
- How is loss of income calculated, what triggers it, and for how many months does it pay?
- Which safety certificates does the policy require, and what happens to a claim if one has lapsed?
- Are platform bookings and direct bookings covered equally?
- Is a minimum stay or maximum occupancy written into the terms?
- If a managing agent runs the property, does anything change?
- What must I do, and within how many hours, to notify a claim?
Insurance is downstream of how the property is run
Most holiday let claims trace back to something ordinary. A washing machine hose that had been weeping for weeks. An extractor fan nobody serviced. A shower seal that failed. The way to keep premiums sane and claims payable is not clever policy shopping. It is inspections, planned maintenance and repairs, and a compliance file that is genuinely current. If you are still setting the property up, the Dorset holiday let checklist puts insurance in sequence with the rest of it.
That is also the difference between the two ways of working with us. On the fully managed plan we hold the keys, run changeover checks through the partner network, keep the safety and compliance record up to date, and give an insurer a clear answer about who is responsible for the property. If you would rather keep control and simply want more bookings, the 5% Flexiestays listing plan leaves all of that with you, exactly as it is now.
Whichever route you take, do one small thing this week. Open a folder and put in it: the policy schedule and full wording, an inventory with values and receipts, dated photographs of every room in its let-ready state, the gas and electrical certificates, and your changeover reports. Claims are not won by being right. They are won by being able to prove it, months later, to somebody who was not there.