Have you ever wondered what Landlord Insurance is? Maybe you are a new landlord who has purchased their first buy to let home or even an experienced property investor who simply wants to check that they have the right cover in place for their tenanted property portfolio. This guide shows the main types of Landlord Insurance available and what each of them covers.
1. Buildings Insurance
This is always the first type of insurance a landlord will consider and is commonly referred to as just Landlord Insurance but due the other types of insurance that fall under this broad term (see the rest of this guide) it should really be referred to as Landlord Buildings Insurance to avoid confusion. The policy itself covers the building of the let property from any structural, malicious and accidental damage. A typical policy will provide protection similar to that of a normal home policy covering things like storms and floods, fire and explosions, subsidence and theft damage. One of the most common types of claim made by landlords is for accidental or malicious damage caused by the tenant living in the property. Some insurers may charge extra for this protection but I would certainly recommend looking out for this cover when getting a new policy.
2. Contents Insurance
Landlords contents insurance covers your furnishings and other contents that are in your let property from the same perils that are on a buildings insurance policy (see above). A common misconception is that if your property is let unfurnished, you don’t need contents insurance cover. What you need to think about is that there are probably carpets, curtains and other furnishings of some description within the property that belong to you. Obviously your tenant is responsible for their own belongings, but you should really consider a landlord contents insurance policy to protect your own contents. Remember that as the amount of contents required is considerably lower than you would have on your own personal home insurance, with most landlords only requiring a few thousand pounds worth of cover, premiums can be incredibly cheap for this sort of cover so it is always worth getting a quote for it.
3. Property Owner’s Liability
This is a much queried type of cover and, in almost every case, will be included under a buildings and/or contents insurance policy (above). It is sometimes called Landlord’s Public Liability and covers any injury sustained or damage caused by the property that the landlord could be deemed liable for due to negligence as the property owner. This could be something like a tile falling off the roof on to a car parked below or the tenant tripping over on a loose section of carpet in the home which injures them.
4. Loss of Rent
Loss of rent comes in 2 different forms. A landlord’s building insurance policy will quite often come with some form of cover following an insured peril (i.e. a flood at your property makes it uninhabitable meaning you lose rent while your tenant lives elsewhere). You can however purchase a separate type of policy that is also known as Rent Guarantee Insurance which protects your income if your tenant defaults on their rental payments to you. This cover can require tenant reference checks and guarantors to be in place but this is dependant on the insurer you use.
5. Emergency Assistance
This cover is normally a very affordable way to give you peace of mind over emergency incidents at your rental property. A boiler failure, a broken window or a blocked drain would all require immediate attention. One simple phone call to your emergency assistance provider and they will sort these situations out for you by using their approved network of tradesmen.
6. Legal Expenses
It doesn’t happen often, but if you get dragged into some form of legal battle regarding your property, this can become a costly affair. A legal protection policy can cover solicitor and court costs in defending you in the event of a civil dispute.
Some insurance providers can provide a Landlord Insurance package that will include some or even all of the above products in one easy to manage policy. It is usually best to decide beforehand what types of cover you want and then to approach a Landlords Insurance broker for them to provide the necessary cover.
It is important to check any insurance policy offered to you carefully before the quote is accepted as the terms provided by one insurer can be completely different to that of another insurer. While price can lure you in, be aware that some products will only offer a very basic level of cover and/or a high excess so it is always best to shop around to find the best value for your money rather than the cheapest price possible.
This article was written by Steve Smith, Company Director of Ashburnham Insurance Services Limited, specialist providers of Landlord Insurance and Buy to Let cover to the UK.©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.