Protecting Your Property Abroad

Summary: How to ensure your property abroad is protected from any and all eventualities and that it remains in pristine condition

There is just so much to think about when buying a property abroad – in fact, I think that if anyone who’s ever done it realized the enormous amount of time, effort, expense and sheer brain power and thinking time that they would have to invest to achieve the desired result, they’d walk away immediately!

Fortunately though, the process progresses in bite sized chunks that the majority of us can face and deal with, and so we can end up with a beautiful home abroad for holidays, investment or retirement.  But the thinking time doesn’t stop there you know!  You now need to think about protecting your property abroad…

In talking about protecting your property abroad what I mean is getting the right level and correct types of insurance in place to ensure your home is covered against all eventualities, that you are covered against any liabilities and that if you’re using the home as part of an investment strategy or business, that business is also protected against its potential liabilities.

Oh my goodness – yes, I am talking about insurance – how dull!

But please bear with me for the duration of this article because I will show you the types of insurance you absolutely must have, the types that are worthless and the level to which you need insurance so that you can go, get it sorted and be done with it – thus saving you hours of wasted time worrying about property insurance abroad and the safety of your new home overseas.

Right – first things first we have buildings insurance.  If you have a mortgage on your property abroad your lender will insist you have buildings insurance so this is quite often one that you don’t even have to think about!  In the event that something pretty catastrophic happens to your home such as a fire, a storm or a flood for example, it can be rebuilt, repaired and restored back to good health if you have buildings insurance.

A guide to how much cover you need is, think about how much it would cost to totally rebuild the home…you don’t need to take into account the land the property sits on, just the materials and labour involved in reconstructing the property.  Any insurer should be able to assess this for you or you could ask a surveyor or a reputable builder to give you an estimate.

Remember that in some countries abroad such as Cyprus and Turkey for example, you need to ensure your building insurance covers earthquakes.  If it doesn’t you may need to take out an additional earthquake insurance policy – get informed!

Contents insurance is the next one to cover.  Now, if your property is a holiday home for you, chances are it won’t have much of high value in it as all your main assets will be in your primary residence…but you’ll still have some furniture and white goods, possibly a TV and some garden furniture to insure so think about how much it would cost to replace all of these things and get cover accordingly.  Remember that if you’re going to be letting the property out or allowing friends and relatives to use it you’ll need accidental damage cover as well because no matter how careful you are with your possessions, unfortunately not everyone is as careful as you...plus accidents really can happen especially if you have children, pets or clumsy types about!

If your property has been bought as an investment and you’ll be letting it out there are certain types of liability insurance that you have to have.  Firstly you have to get legal liability insurance in case you’re sued by someone who stays in your home and has an accident in it and secondly, if you’re going to be employing someone to clean the pool, manage the property or just keep the gardens tidy you’ll need employer’s liability too in case your employees have an accident.  Get cover with around a 2 – 3 million pound indemnity…

Different to legal liability insurance is legal expense insurance - this is more of use to those letting out a property permanently as it can come into its own if you have difficulties evicting a tenant or getting your rent out of them.  It’s unlikely you will need this if letting a home out overseas for occasional use…but if in doubt speak to an insurer about what it covers and how it may be of use to you and then read the policy documents to make your own mind up. 

By the way, speaking to an insurer about whether you need insurance is rather like speaking to a child and asking it whether it needs sweets…the answer is always going to be ‘yes’ – which is why we suggest you get policy documents and brochures and make your own mind up about whether a given product meets your own requirements.

Finally you can insure against loss of rent - but this is really only used by those who have permanent tenants and who derive the majority of their income from their investment property assets.  Say for example your property abroad is flooded and cannot be let out and you have to get the builders in and wait for it to be fixed, during that period you will be losing potential rental income and certain policies are available that will pay out in such an instance…but these tend to have many, many exceptions and exemptions included in the small print.

Okay – see, that wasn’t so painful and dull was it!  Hopefully this information helps…and in a final word or two of warning and advice it is often advisable to get your insurance abroad in the location where your property is located, always, always check the small print and understand what is covered and what is not covered and remember that there may be additional clauses you need or policies to take out if a given location is susceptible to certain issues from pest infestation to subsidence, from earthquakes to flash floods.

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