We tend to only think about our insurance policy twice: when something has already happened and we need assistance and secondly when we need to renew it.
Verifying the coverage of your insurance policy should be a must, among other duties in your time between seasons. This is important even more so now that several regional governments in Spain have included insurance coverage as a requirement in their regulations. Galicia, for example, has established a requirement that holiday rental owners are responsible to cover any damage caused to third parties, both material and personal.
But what if I already have home insurance with my property? Is there a specific insurance policy for holiday rentals?
As you might imagine, requirements and conditions of your holiday home insurance could change depending on the company or package that you choose. Companies such as Mapfre, Axa, Verti and Direct Line offer different types of packages that fit several types of home insurance related to holiday rentals. Currently, there are several options available, ranging from an all-in-one package that will cover most of the common events that could happen to your holiday rental and then those that are tailored to your needs. Although the second option may be costly it is definitely worth considering for holiday rentals.
Holiday home insurance
Many of the holiday homes scattered throughout Spain have home insurance, a generic type of insurance usually associated with a long-term rental. However, this does not cover the uses related to tourism purposes. Therefore, only long-term rentals are covered by this type of policy.
This means that if touristic (or economic) activity is carried out in the property that results in an incident, your property is not covered by this type of insurance. This is due to the fact that this insurance policy does not contemplate that economic activity will be taking place on the property.
As Sergi Martí, Director of Innovation at Ribé Salat stated: "When we are considering insurance of tourist rental properties we are talking about liability insurance"
Liability insurance
Holiday homes are recognised as tourist accommodation and therefore it is important that the wide range of economic activities including tourist services and accommodation.
There are others types of insurance policies that in addition to Civil Liability coverage also include coverage for the tenant. This includes insurance for vehicles of guests located in closed and guarded premises, luggage custody, damage to garments, etc.
But is it insurance for a business or for individuals?
"It could be said that it is a type of business insurance as it relates to the responsibility derived from a client engaging in a form of economic activity," says Sergi.
It is a type of insurance that is separate from general home insurance. These types of policies are adapted to the particular needs of owners and managers before incidents that may arise as a result of the guests' stay.
If we focus on the property managers or a holiday rental homeowner, it is an insurance that regardless of any other insurance coverage is tailored to them and will mean your apartment or house is covered in preparation for any potential incidents that may occur during the tenant's stay.
Does it change depending on the number and type of holiday rentals included in the policy?
Normally, insurers or consultants within the industry adapt prices and coverage to the needs of the client. The same values are not applicable to a manager with several houses in his portfolio compared to a private owner.
The price of a specific insurance for holiday homes, or otherwise a civil liability, will be determined by the volume of billing and the set of possible incidents it will be covering. For example, home insurance will take into consideration factors such as the age of the property, location, etc.
Are guests covered by this policy?
As explained by Sergi, a Liability policy is aimed at covering incidents caused to third parties that arise from the economic activity generated by holiday homes.
Examples such as theft, loss, destruction or deterioration of belongings are not included in this type of insurance. However, there are particular packages such as the Foro Vacacional that will cover some of these situations.
Furthermore, personal injuries are not included in this policy as long as the damages suffered are not a direct responsibility of the owner. If a guest suffers a fall because of the poor state of a home, the policy would cover an incident like this but only in that case.
And if I can not accommodate a guest, am I covered?
There may be situations for reasons beyond our control that a house becomes unavailable for guests for the enjoyment of their holidays. A breakdown, a fault in the building, bureaucracy problems, etc. Therefore is the cost of an unforeseen event like this covered? Generally no it is not.
In the event of a breakdown of the property, the type of coverage that comes into action is the home insurance, which will cover the damage caused to the home. However, there are different selective options when you take out home insurance policies that can cover these types of situations. The price is generally high due to the specific features that are linked to housing and management when it comes to holiday rentals.