Over 90 per cent of Britons with holiday homes abroad are underinsured

Many British owners of property abroad are underinsured following a change in legislation. The Rome II legislation came into effect this month and owners risk facing challenges in UK courts if they have inadequate public liability insurance.

The change in legislation particularly affects owners of European property owners, Tonic Insurance told Overseas Property Professional (OPP). As a result of the change, over 90 per cent of Britons with homes overseas are now underinsured, particularly those who rent out their holiday home to guests.

Insurance cover for public liability in Europe is traditionally at a very low level. However, should a UK national injure themselves in a European property and both owner and tenant reside in Britain, action can be brought in the UK. Awards in the British courts are often higher than in mainland Europe and typically exceed the level of cover offered by local insurance companies.

Tonic Insurance's chief executive and chairman, John Newman, explained the problem to OPP: "The liability cover for Spain and Portugal is often extremely low, frequently in the region of €100,000 to €160,000. This would leave a client very dangerously exposed, as any meaningful claim would potentially exceed this limit."

The company has recently branched out into the overseas market and provides a £5m limit of indemnity for mid range homes to the largest properties, Newman added. Its insurance product provides coverage for holiday villas in France, Italy, Spain, Portugal, Cyprus and Greece as well as holiday cottages in the UK and Ireland.

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