What is Cancellation Insurance for Holiday Let Owners and is it needed?

Policy Powerhouse

22 November 2021

What is Cancellation Insurance for Holiday Let Owners and is it needed?

Whether you own a second home by inheritance, for long term investment potential or for commercial purposes, by renting it out as a holiday let, you’re hoping to make a return from your investment. And if you can do this without adding stress and turmoil to your life, then all the better, right?

Now, more than ever, holiday rentals are being snapped up and run as businesses for financial gain, but that’s not to say it’s always going to be plain sailing. 

The ideal of a low maintenance, high return investment can sometime end up in a reality quite far from this idealism. Customer cancellations and property maintenance issues can result in the loss of revenue, whilst stifling property leases and insurance terms can cause challenges to entering the holiday let market in the first place.

But the good news is, the staycation market is booming and if you can mitigate your risks then you’re in good stead for a viable and fruitful investment.  Here we discuss booking cancellations and what you can do to ensure that these won’t cause you sleepless nights.

Holiday Cancellations

The subject of booking cancellations is a complex one when it comes to refunds; one that is explored in this PASC article. But with new insurance products that are being released onto the market, these challenges are fast melting away.

Taking Covid-19 out of the equation for a moment, holiday cancellations have always been a very real threat to holiday let owners. There are many likely reasons for a booking to be cancelled, including;

  1. Death of booking party member (non-covid related)
  2. Illness/injury of booking party member (non-covid related)
  3. Death/serious illness of non-travelling family member (non-covid related)
  4. Travel Disruption e.g. floods/snow/bad weather preventing travel.
  5. Redundancy 
  6. Changed Plans / Disinclination to proceed with booking 
  7. War/Terrorism
  8. Pandemic/Epidemic (Covid is a prime example)
  9. Govt. instruction/direction not to travel

It typically falls to the owner to decide on the conditions that they will refund a customer for a cancelled booking. If you choose to offer a refund the income is lost, and if you don’t offer a refund you may not secure the booking.

So, for holiday home owners that want the comfort of knowing that their revenue will be protected, Holiday Cancellation Insurance is an attractive option. 

What is Holiday Cancellation Insurance?

Cancellation Insurance is a master insurance policy for holiday let property owners or managers, that allows them to recover the cost of a refund if an insured booking is cancelled by the holiday maker, which isn’t subsequently re-sold.

Why buy Holiday Cancellation Insurance?

Beyond revenue protection for the owner, there are other advantages of Cancellation Insurance:

  1. With Cancellation Insurance, holiday let business owners can change their cancellation terms to provide a refund if the guest does not take the booking. 
  2. Cancellation Insurance enables property owners/managers to compete with, or sell through, OTAs (Online Travel Agents) such as Booking.Com who will often offer full refund terms. This can often clinch the deal for the larger OTA, and means that there is now a more level playing field for smaller, independent property let owners.
  3. Revenue protection – a holiday let owner/manager can be assured of their revenue once the booking is made, irrespective of what the guest decides to do.

Premier Cottages/PASC cite the marketing advantage as one of the main reasons for buying Holiday Cancellation Insurance. Being able to offer better cancellation terms improves sales, delivering a strong ROI on the cost of the insurance.

What does Holiday Cancellation Insurance protect? 

Although you’ll need to check individual policy terms, typically we would expect to see:

  • Protection for the property owner/manager against cancellations, reimbursing them the holiday booking revenue when cancelled within a 60 to 2 day window of the start of the booking). 
  • Cover ranging from 80% to 100% of the lost booking revenue. 
  • Cancellations caused by any reason other than as a result of terrorism, war, epidemic or pandemic are usually covered. Cancellations caused as a result of terrorism, war, epidemic or pandemic are normally excluded.

What is the Difference between Cancellation Insurance and Cancellation Insurance for Holiday Let Owners?

Cancellation Insurance is purchased by guests to cover any costs that they may incur if they have to cancel their travel. This will include a range of protection – including items that are non-refundable by you, the property owner, even if you have Cancellation Insurance in place. Guests should be encouraged to buy cancellation insurance.

Cancellation Insurance for Holiday Let Owners covers you, the holiday property owner, for cancellation by a guest, allowing you to offer more generous refund terms and as a consequence secure more bookings whilst protecting you against financial loss should a guest cancel.

Typical things that may not be covered by Holiday Let Owners Cancellation Insurance (and therefore would not qualify for a refund) but may be covered under a guest’s cancellation insurance (travel insurance):

  • Cancellation within 2 days of the holiday commencement
  • Covid-19
  • Delays travelling to the property
  • Repatriation home following accident or injury


Buying Cancellation Insurance will protect your holiday let business and give you peace of mind, and it should make sense from a financial point of view by allowing you to compete, or trade , with OTAs thanks to the ability to provide more favourable booking terms.

It is important to note that Cancellation Insurance for holiday home owners is not yet widely available, and only currently offered by a few specialist holiday providers. 

Policy Powerhouse offers specialist cancellation insurance for holiday home owners, starting at just 3% of the booking price.  Our insurance recovers 80%-100% of your lost revenue should a customer cancel their booking. 

The coverage applies to cancellation by the Guest between 60 and 2 days from the insured booking commencement date for any reason other than as a direct or indirect result of terrorism, war, epidemic or pandemic. 

Keen to know more and get started? Contact us