Safe as holiday houses?

If your second home isn't properly insured, you could get burnt by your place in the sun
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In theory, owning and letting out property abroad can be a fantastic investment and great fun too. But it can quickly become a headache if you don't take out the right insurance. Unfortunately for many people, the first time they think about insurance is when things go wrong and they have to make a claim. It's then that they find out they aren't properly covered.

Richard Bowser, editor of Property Investor News says, "Failing to get the right insurance cover is just one of the many mistakes that amateur investors make. Unfortunately, common sense often goes out of the window with the first glass of foreign beer."

So how can investors get it right? The first thing to remember is that any let property can be unoccupied for short periods, while holiday homes can be unoccupied for months at a time in the off-season. Your insurance will need to extend to cover these times. Most insurers will do this, providing the owner does all they can to minimise risks - this would include making sure water and electricity is turned off, fitting good security devices and getting someone to look in on the property regularly.

The biggest problems arise if something serious happens, which results in your property being uninhabitable. If you have a flood during the peak holiday season, this can be a financial nightmare. You'll need to have things fixed as soon as possible and put holiday guests or tenants in temporary accommodation. It's worth checking that your policy covers loss of rent as well as the cost of getting you out to the property following a big claim - because you'll probably need to be on-site to get things fixed. If your insurer has a 24-hour helpline facility this can also be a comfort.

The next question is where do I buy cover? Many people who don't speak the local language will prefer to buy from a UK insurance company. However, many UK insurers will only cover your foreign property if your UK home is insured with them already.

While mainstream UK insurers are only just waking up to the market for insurance for properties abroad, there are an increasing number of UK mortgage and insurance brokers that now offer good insurance policies for places such as the US, Spain, Portugal, France and Italy. However, for more out-of-the way places, you'll probably have to seek out a local insurer in that country.

If you buy a policy issued by a foreign insurer which is much cheaper than what you pay on your own home, it may be because something we take for granted is not covered at all. In some places public-liability cover may not extend to holidaymakers or longer-term tenants, subsidence may not be covered and swimming pools may be excluded.

Watch out, too, for "residents' insurance" and "community insurance" schemes. These are common in big developments or apartment blocks, especially in France, Spain and the States. However, they are usually limited to communal areas and may not cover individual properties.

Disputes on title to land are a risk in Northern Cyprus and parts of former Yugoslavia. In some parts of Spain, owners have found their land has been earmarked for development under the "land-grab law". Currently, this kind of thing is hard to get insurance against. So, get a good lawyer to carefully check if there are any title issues.

If you buy a foreign policy, stick to a well-known insurance company and have the policy checked over by a local who can understand the often rather strange insurance wording the policy may contain.

Nick Coney bought a property in Croatia last year, and arranged insurance locally. He says: "One advantage local insurers have is that they have more information on the risk of storms, floods, earthquakes and landslides locally.

So, even where cover for these risks is available from a UK insurer, a local insurer's knowledge of the real probability of an event occurring means they can probably get premiums lower than their counterparts in the UK."

Intasure 0845 1110680, www.intasure.com; Letsure 08700 770880, www.letsure.co.uk; Property Investor News, 020-8906 7772, www.property-investor-news.com; Croatian property featured: www.coney.biz/Funtana

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