Ask the expert

Like most self-catering cottage providers, we include in our terms and conditions of rental a clause stating that the hirer is responsible for all loss / damage caused by their party during their stay. A guest has recently questioned the extent of this liability, if for example they managed to set fire to the cottage! My understanding is that :(1) having signed our terms and conditions, they would be liable for the full cost of replacement / repair if they were indeed responsible for causing the damage, and (2) the "public liability" element of traditional travel insurance would adequately cover any such damage, subject to policy limits / excess.Is my understanding correct ? If so, what would be the difference if the guest was staying in a hotel and accidentally started a fire resulting in substantial damage / repair costs ?

Answered by our Expert: The Michelmores Leisure Team

As a matter of pure contract your guests having signed the terms and conditions may well be liable for the full cost of repair or replacement so long as the terms of the contract overall are considered to be fair. However, you cannot always rely on being able to successfully recover such sums from your guests and from a commercial perspective we would strongly advise that you do not rely on your guest to have adequate insurance cover. You should ensure at the very least that you have your own insurance cover in place in respect of the building as you will want to protect your asset. You might, however, wish to make your guest responsible for fixtures and fittings as you may not want to make a number of individual claims in respect of these items.
 
You should check your insurance policy as your insurer may seek to recoup sums it has paid out to you direct from your guest. If this is the case you must make that clear to the guest before the letting commences. If you find that this dissuades guests from using your holiday accommodation you may wish to amend your policy.
 
You might also consider whether to include a clause requiring your guest to reimburse you for any excess you have to pay.
 
A hotel is likely to have insurance cover which covers accidental damage to the building as well as to its fixtures and fittings caused by one of its guests. The amount of time spent in hotel rooms and the use to which they are put will mean that there is largely less risk of damage.
 
If you would like any further information or advice on this, please contact Michelmores  LLP leisure team on:  01392 688688