Serviced Apartment & Corporate Accommodation Insurance
Serviced apartments sit between a hotel and a residential let. Guests stay for days or weeks, usually under a licence rather than a tenancy, and the operator provides cleaning, linen and a point of contact. That arrangement affects who insures what, what the policy needs to cover and which rules apply to the building.
Ownership and operation are often separate. A property owner may let flats to an operator who then licenses them to corporate guests, or appoint a management company to run them on the owner's behalf. The owner's buildings policy, the operator's liability and contents cover, and the leases between them all need to fit together.
Short letting is frequently restricted. Long leases on flats commonly limit use to a private dwelling, residential mortgages and many buy to let mortgages do not permit short stays without the lender's consent, and in some areas planning rules or licensing apply. An insurer may decline a claim if the property was being used in a way the owner had no right to permit.
We can advise owners, operators and managing agents of serviced apartment buildings and corporate accommodation portfolios on how the property and the operation should be insured, and on the questions to settle before the first guest checks in.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
High guest turnover
Guests change frequently and do not know the building. Unfamiliar appliances, fire doors wedged open, cooking left unattended and baths left running are typical causes of fire and escape of water damage, often affecting flats below or neighbouring residents.
Fire safety in short stay accommodation
Accommodation let to paying guests on a short stay basis is generally treated as non domestic for fire safety purposes in England and Wales, which brings duties such as a suitable fire risk assessment. Detection, escape routes and fire doors may need to meet a higher standard than an ordinary let.
Restrictions in leases and mortgages
A head lease limiting use to a private residence, a mortgage that excludes short lets or a planning restriction can all make the use unauthorised. Beyond the legal consequences, insurers may treat it as a material fact that was not disclosed.
Guests and their belongings
Guests can be injured by faulty furniture, slips in bathrooms or falls on stairs. Corporate clients may hold the operator to contractual standards, and guests' laptops and luggage stolen from an apartment can lead to complaints and claims.
Operator, owner and freeholder in one building
Serviced apartments are often a few flats within a larger block. The freeholder insures the building, the flat owner the interior, and the operator the business, and a single water leak can touch all three policies along with the residents below.
The cover we arrange
We arrange insurance around the property, its use, construction, occupancy and ownership structure. The cover available will depend on the individual risk and the terms offered by insurers.
Buildings or landlord's interior
Where the owner holds the freehold, the building on a reinstatement basis. Where the apartments are leasehold flats in a block, the freeholder's policy usually insures the structure, and the owner needs cover for fixtures, fittings and improvements inside the flat.
- Structure where the freehold is owned
- Landlord's fixtures and improvements in flats
- Kitchens, bathrooms and flooring
- Accidental damage by guests where included
Furnishings and contents
Furniture, appliances, linen, televisions and the equipment needed to run each apartment. Replacement after a fire or flood often includes the cost of restoring an apartment to a standard fit for corporate guests.
- Furniture, appliances and linen
- Televisions and entertainment equipment
- Malicious damage by guests where included
- Contents in storage and common areas
Public liability
Injury to guests and visitors arising from the apartments and the operator's services. Owners and operators may each need their own cover, depending on who controls the premises.
- Injury to guests and visitors
- Damage to neighbouring flats
- Guests' property where the operator is liable
- Limits typically £5m or £10m
Loss of income
Booking income lost while apartments cannot be let after insured damage, including damage to the wider building that stops guests accessing them. Corporate block bookings that are cancelled may also be relevant.
- Booking income during reinstatement
- Damage to common parts preventing access
- Indemnity period covering refit and relisting
- Loss of rent for owners letting to operators
Employers' liability
Housekeeping, maintenance and reception staff bring a legal requirement for employers' liability. It can be arranged where required, subject to the policy terms.
- Housekeeping and laundry staff
- Maintenance and reception
- Agency staff where applicable
- Subject to policy terms
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Whether you are the owner, the operator, or both, and how apartments are held
- Typical length of stay and whether guests occupy under a licence or tenancy
- Number of apartments, whether they form a whole building or flats within a block
- Consent for short lets from the freeholder, the lender and the planning authority where needed
- Fire risk assessment, detection, fire doors and escape routes
- Guest vetting, deposits, house rules and how bookings are taken
- Annual booking income and the indemnity period sought
- Previous claims, particularly escape of water and guest damage
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Length of stay and guest profile
Corporate guests on longer stays tend to present a better risk than very short leisure lets. Party bookings and weekend stays increase the risk of damage and noise complaints.
Building and fire safety
A purpose built serviced apartment building with modern detection and compartmentation rates differently from scattered flats in older blocks where the operator has less control.
Management and housekeeping
Professional management with frequent inspections, cleaning between stays and prompt maintenance reduces escape of water and damage claims.
Scale and concentration
A portfolio spread across several buildings carries different exposure from many apartments in one block, where a single event could close a large share of the business.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Use not permitted by lease or lender
Where the lease, mortgage or planning position does not allow short lets, insurers may decline cover or claims. Disclose the use and the consents you hold before a policy starts.
Wear and tear from frequent occupation
Gradual deterioration of carpets, furniture and fittings through constant use is a running cost, and insurers do not pay to refresh tired apartments.
Guest damage without an extension
Malicious or accidental damage by guests may need a specific extension. Some policies treat deliberate damage by a lawful occupant differently from damage by an intruder.
Fire safety duties not met
Where a fire risk assessment has not been done or alarms are not maintained, a claim may be challenged and the operator may face enforcement action, which insurance does not cover.
Common questions
Can I use a standard landlord policy for serviced apartments?
Usually not. Landlord policies are written for tenancies, often assured shorthold tenancies, rather than short stays under a licence. Serviced apartments need cover that reflects guest turnover, the operator's services and loss of booking income.
Who insures the building if my apartments are in a block?
Usually the freeholder or management company, under the lease. You insure your interior, contents, liability and income. Check the lease permits short lets, because the freeholder's insurer may also need to know about the use.
Is a serviced apartment the same as a hotel for insurance purposes?
No. There is usually no restaurant, bar or permanently staffed reception, and apartments may be spread across buildings with other residents. Insurers assess them as a distinct class, between hotel and residential let.
Do short lets need special fire safety measures?
Generally yes. Short stay accommodation in England and Wales usually falls under the non domestic fire safety regime, which requires a fire risk assessment and suitable precautions. Scotland has its own licensing scheme for short term lets.
My mortgage lender does not allow short lets. Will my insurance still pay?
It may not. Lender restrictions are not insurance terms, but using a property in breach of them can raise questions about disclosure and whether the use was one the insurer agreed to cover. Get the lender's consent before letting on a short stay basis.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.