To Let or Not to Let?

23rd June 2020

That is the question which requires an answer and some expert advice for farms which diversify into new enterprises to realise extra farm income.  In fact, it has been reported that over 60% of farms have diversified in some way and it is often the case that these projects become a good proportion  of annual turnover.   As lockdown restrictions begin to ease, here below Chris Clement Commercial Director, H&H Insurance Brokers gives advice on the importance of having the correct cover in place.

“As a business idea, farm diversification can be a good source of revenue, however, as with all things, there needs to be an air of caution and consideration given to the practicalities, one of which is most definitely insurance.  Holiday lets are a prime example of this, glamping, renting out spare farm buildings or rooms is an ideal way to raise extra income on a farm.  In fact, for some farms, aside of the lock down caused by COVID-19 which shook the tourism world, raising extra income from these existing assets has become a way to help make ends meet.

This is not an area to ignore, especially where the public are concerned.  Under insuring or failing to insure these enterprises properly, can cause problems in the future, which can be costly and stressful.  We see this as insurance specialists, and it is so preventable by following some simple steps to ensure that you and your farm is protected beyond the day-to-day farm operations.

This year more and more people are wanting to escape to the country, to enjoy the great outdoors. Much of this accommodation will be farm based, perhaps an existing cottage or something quirkier like a barn, a shepherd’s hut or camping pod.  So if you have ventured into this world, it is imperative to look at your insurance cover and what your needs will be.  There is an assumption that an existing farm insurance policy will suffice as cover, but that is not always the case and it is important to double check as being under-insured would be a considerable risk.

First of all it is important to look at the ‘service’ you intend to provide in order to find the right level of cover.  For example, if you are just going to be a place to stay with no cleaning or food provided, this as non-serviced accommodation.  If you were to add these services, we would consider this to be serviced accommodation.

Non-Serviced Accommodation – this is the simplest type of holiday let and often the preferred option as it is much more ‘hands off’, allowing your time to be spent on the farm, except the odd enquiry and cleaning turnover at the end of the stay.  You are essentially renting out a space for a time period with agreed facilities.  For this you would need specific holiday home insurance policy, which can often be added to a typical Farm Insurance policy, which would include loss of rent/alternative accommodation cover, the benefits of which are evidential following the pandemic lock down where holiday rentals had to close.  You would also need to consider the usual buildings and contents cover for a let property and both public and employer’s liability.

Serviced Accommodation – this is more like a hotel in that the rental of the space comes with added services such as breakfast, beds changeover, a washing service or even provision of afternoon tea and cakes.  This would require a serviced accommodation insurance policy which is tailored to this specific model of short-term letting to include buildings, contents, business interruption, public liability and employers’ liability, again insurers can be very flexible, and this can be added to an existing farm insurance policy.

Dependent on the model you use to advertise, these options should cover everything, however, if you choose to use the Airbnb approach, you will need to consider a bespoke insurance product due to the versatility of this model.  This would include cover for an individual room, holiday accommodation combined with longer-term lets, year-round holiday accommodation and properties leased on rent-to-rent terms.

Insurance is there to help you out when things go wrong, however, when public liability is to be involved, this adds even more requirement to protect you and your business.  A specialist broker will be able to make sure that you get the right cover at the right price,  this need not cost the earth and provides peace of mind, especially when you are venturing into pastures new.”

With offices across the North of England and Wales, H&H Insurance Brokers is an independent insurance broker, who in addition to providing competitive and bespoke farm insurance also advises on farm health and safety through its H&H Safety brand.