When you let a property, particularly if this was your own home, it’s tempting to just leave the insurance on a property owner’s policy; no hassle, you’ve been with the company for years, so just leave things as they are, right?
Well no, that’s completely wrong and muddled thinking. For as start, every time there is a change in circumstance, however small, you must inform your insurance company, otherwise, whatever cover you have is non-existent. So if your property is vacant for longer than it states in your policy, usually a couple of weeks or up to 28 days, or importantly, if you rent out the property, you must inform your insurers.
As a landlord, it is essential that you are adequately covered for your let property. When you purchasing a buy-to-let property or if it is your own home, this is a major asset which you own, so you must take the time to seek a comprehensive policy to protect you from the potential damage or losses involved with letting a property, and insure for the full replacement value.
You must also inform your insurers immediately if there are any changes in circumstances if you want to maintain this protection. Most landlord policies also specify that regular inspections must be carried out.
Not only does a comprehensive landlord’s insurance policy protect the landlord’s investment, the property itself, but perhaps just as important, if not more so, because potential claims can be very high, is protection for public liability claims, personal injury claims from third parties can be astronomical.
A household policy will not provide the level of cover that you require to protect you and your assets as a landlord, and could, if the unthinkable happens, leave you with a big loss or facing a legal claim for damages which you cannot possibly afford to pay.
An average landlord’s comprehensive policy will start from around £250 to £300 pa (at 2017 prices), that’s just £5 per week per rental property for total peace of mind.
This will cover the structure of your property against fire, subsidence, floods and weather – remember you still need to pay the mortgage if you have to when your property is unlettable through these events, and even when you own outright, is it really worth taking the risk?
A really good policy will also include loss of rent cover, plus the cost of temporary accommodation for tenants should, for example, flood or fire make the house uninhabitable. Liability insurance, which protects you if a tenant, visitor or tradesman falls or trips and sues you for damages. This cover should also be included as a matter of course.
Landlord contents insurance is important if you intend to let your property furnished, especially if the property was your own home and you left in some expensive furniture and furnishings. It will also cover appliances and certain floor covering such as carpets in unfurnished rentals. This type of cover is usually included to a maximum of £15-20,000, far less that a normal household insured contents cover. As there is usually an excess and a single-item limit, it could make sense to pay repair costs yourself if the claim is limited.
The main type of insurance cover include:
Buildings and Landlords Contents – It is very important to make sure you are insurance for replacement value, which is not necessarily the same as market value (or the price you paid). It is recommended having a building survey to get an accurate figure, otherwise you may find yourself under insured when averaging will be applied.
Property Owners Liability – This covers the costs and damages made towards anyone who has suffered an injury following an accident caused by your ownership of the property. You need high limits of indemnity to ensure your costs are sufficiently covered – usually around £2m.
Accidental Damage – Cover following accidental damage to your Buildings and Landlords Contents, can sometimes be an extra so watch out on this one.
Malicious Damage and Theft by Tenant – This provides peace of mind cover for any malicious damage caused or theft by the tenant during the tenancy period. This can be excluded in some policies, so again, watch out.
Unoccupied Premises – There are a number of reasons why your property may be empty from time to time, including periods of renovation or between lets. Some insurers exclude or restrict this cover while the property is empty. Check carefully and always inform your insurer when the property is empty for any length of time.
Legal Expenses in Respect of Property Disputes – You may encounter legal issues with your property in respect of tenancy or property disputes – check if you have this useful cover.
Trace & Access – Provides cover in respect of sourcing, diagnosing and repairing the cause of damage, such as leaking pipes, blocked drains etc. Many policies exclude this, or offer a low limit of cover.
Loss of Rental Income & Alternative Accommodation – Following an insured loss such as fire or flooding, your property may become uninhabitable which means you need to provide alternative accommodation. Check that your policy includes temporary re-housing of the tenants.
Types of Tenancy – Some insurers will not cover certain tenancy types including DSS (Housing Benefit Tenants), Full-Time Students and HMO properties.
Tenants are responsible for insuring their own contents, so you should encourage them to take out their own insurance cover for these items.