Holiday Home Insurance in Australia: Traps and Pitfalls Every Owner Should Know

Owning a holiday home in Australia is a dream for many. Whether it’s a coastal getaway, a cabin in the mountains, or a riverside retreat, a second property can provide both lifestyle benefits and investment opportunities. But insuring a holiday home isn’t as simple as taking out a standard home and contents policy.

Holiday home insurance in Australia comes with unique conditions, traps, and pitfalls that can catch owners off guard often leading to denied claims and unexpected costs.

If you own, or are thinking of buying, a holiday house, here’s what you need to watch out for.

1. Holiday Home Insurance vs Standard Home Insurance

One of the biggest mistakes owners make is assuming their holiday property can be covered by the same policy as their main residence. Insurers classify holiday houses differently because they are often left vacant for long periods, making them more vulnerable to theft, vandalism, or unnoticed damage.

Trap: Taking out a standard home insurance policy only to find it won’t cover your holiday property when you need it most.

2. Unoccupancy Clauses: The 30–90 Day Rule

Most Australian insurers have strict unoccupancy rules. If your holiday home is left vacant for more than 30, 60, or 90 days (depending on the policy), parts of your cover such as theft, storm, or water damage may not apply.

Pitfall: Believing you have year-round cover, when in reality, your policy excludes damage after a certain period of vacancy.

3. Short-Term Rental & Airbnb Insurance Gaps

Many holiday homeowners rent out their properties through Airbnb, Stayz, or Booking.com. However, standard holiday home insurance often excludes cover for paying guests. Some insurers require you to take out additional short-term rental insurance or a specialised Airbnb property insurance policy.

Trap: Assuming your guests are covered, only to discover you have no protection if they cause damage or a liability claim arises.

4. Maintenance and Inspection Requirements

Holiday homes aren’t just set-and-forget investments. Insurers often require regular inspections, lock and alarm systems, and general upkeep such as gutter cleaning and smoke alarm checks. If a claim arises and the property is found to be poorly maintained, insurers may reduce or reject the payout.

Pitfall: Thinking insurance is a substitute for maintenance. In reality, insurers expect both.

5. Contents Cover Limitations

Holiday homes usually contain fewer possessions, but they’re often targeted for high-value items like TVs, sporting equipment, and outdoor furniture. Some policies reduce contents cover for holiday homes, while others exclude portable valuables unless specifically listed.

Trap: Being underinsured for contents because your policy automatically restricts cover for second homes.

6. Bushfire, Flood, and Natural Disaster Exclusions

Many holiday homes are located in scenic but high-risk areas such as bushfire-prone regions, flood zones, or coastal storm surge areas. Some policies exclude these risks altogether, or apply much higher excesses.

Pitfall: Finding out too late that your policy doesn’t cover flood, bushfire, or cyclone damage or that your excess is in the tens of thousands.

7. Premiums Are Often Higher Than You Expect

Because of the extra risks, holiday home insurance premiums in Australia can be significantly higher than standard home insurance. Owners sometimes try to cut costs by underinsuring or choosing the wrong type of policy leaving them exposed when it matters most.

Trap: Choosing the cheapest policy without checking whether it provides the right level of cover for holiday house risks.

How to Get the Right Holiday Home Insurance in Australia

• Be upfront with your insurer about whether the property is used privately, occasionally rented, or listed on Airbnb.

• Check unoccupancy conditions and arrange regular inspections if the property sits empty for long stretches.

• Review natural disaster cover carefully, especially in flood or bushfire-prone regions.

• Work with an insurance broker who understands holiday home insurance and can compare multiple policies to find the best fit.

Final Word

Your holiday home is more than just a property it’s a place to relax, make memories, and even earn rental income. But without the right holiday home insurance, your dream getaway could quickly become a financial nightmare.

By understanding the traps and pitfalls and working with an insurance professional who specialises in holiday house cover you can protect your investment and enjoy peace of mind.

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