As a landlord you will most likely be aware that standard owner occupier home and contents insurance may not be a valid form of insurance cover. No matter what type of property you own it is highly likely you will have made a sizeable investment which needs protecting.
When considering landlord insurance you have to decide how important protecting your investment is and what would be the consequences if anything was to go wrong. You can never be sure when misfortune will strike; with a landlords insurance policy in place there is a good chance that these potential issues will be covered.
There are a number of key aspects to landlords insurance, the exact type of insurance policy that is suitable for you will depend on the differing characteristics or your role as landlord. When receiving a quote the landlords insurance company will take into consideration a number of key pieces of information that are associated with your role as landlords which will include the value of the property, location, and if any previous claims have been made.
Having landlord insurance can help in a number of ways:
- Investment Protection
- Always Receive Rent
- Property Damage Cover
Landlord Insurance, much like most insurance policies can be tailor made to suit your individual needs. If you are a landlord with a number of properties you may require multi property landlord insurance, in most cases this cover allows the policy holder to make mid-term adjustments or amendments meaning that properties can be added and removed when they are bought or sold.
The aim of landlord insurance is to ensure that protection is available and ensures that the landlord is able to earn income from their property in between tenancy agreements. If a legal dispute arises between the tenant and the landlord and the policy covers legal expenses, then the landlord will be entitled to compensation for these costs.
Does Landlord Insurance Cover Damage To properties?
Landlords will often require a damage deposit in an attempt to deter tenants from maliciously damaging properties. Damage does not always have to be malicious, accidents do happen and the vast majority of the time it will be down to the landlord to pay for the expense.
Damage will occur to rented properties, as a landlord it is your responsibility to uphold and maintain the property to an acceptable standard. Depending on the specifics of the landlord insurance policy, a number of financial advantages could be available to the policy holder.
If damages occur to a property which make it unsuitable for letting, landlords insurance is there to provide a financial safety net meaning that the cost of the damages are covered. Any loss of earnings whilst the property is being repaired will be claimable by the landlord depending on the type of insurance that you have in place. Some policies will not cover damages to both the interior and exterior of a building, it is important that this is clarified to avoid a potentially costly experience. When looking for quotes it is important to check that the policy covers this as the vast majority of policies do not
What To Consider When Taking Out Landlord Insurance
One of the most important aspects to taking out landlord insurance is understanding the specific aspects of the policies available. Simplistically put, there are two choices of landlords insurance, either a comprehensive policy or a peril policy. A comprehensive policy, as the name suggests covers the vast majority of situations unless clearly stated otherwise. On the flip side, peril policies, on the whole cover similar aspects just generally fewer forms of damage. A less comprehensive policy should clearly list the items that are covered from losses, any items outside of this will not be insured.
How Will Landlord Insurance Protect Me?
Landlord insurance provides protection for the policy holder in a number of ways. The cover is not only used to protect landlords against damages to structures, building and their contents, but also against a number of other risks. If a disaster occurs, natural or otherwise you as the landlord you may find yourself in the situation where you are responsible for re-housing a tenant. Obviously you will want to keep this amount of time to a minimum as this will result in a loss of earnings which could be costly. Certain landlords insurance policies will cover this loss of earning and you will be able to claim the money back from your insurance company.
At times, Insurance policies can be hard to understand, there is a lot jargon associated with them which at first can appear slightly daunting. If you do not fully understand the policy you would be wise to seek advice from a landlord insurance broker who will explain it more clearly. If you do not fully understand the policy you will be at a disadvantage if anything goes wrong, there is nothing worse than trying to make a claim only to find that you are not covered.
I’m A Buy To Let Landlord Do I need Cover?
As with any form of landlord ownership, protecting your investment is important. As a buy-to-let landlord it is paramount that you have a landlord insurance policy that will ensure you are completely covered in the event of an accident or damage. You may believe that your current traditional home insurance will be sufficient but as you will be aware there are extra risks associated with tenants living in your property.
Some landlords prefer individual policies for each residency, again this down to personal preference. When speaking to an insurance broker looking for multi property insurance, enquire if you can enrol all of your properties into one policy, this has a number of advantages allowing the landlord to have a schedule of insurance listings.
In recent times the number of people seeking properties to let has increased dramatically for a number of reasons. People are finding it more difficult to borrow money to buy properties and with high levels of unemployment there is a general uneasy feeling with regards to lending money. Due to this there has been a By To Let property boom making properties more accessible for the first time buyer. This combined with a reduction in mortgage rates which have been driven down had led to an almost proportional reduction in landlords insurance premiums.
Buildings and Contents Insurance
Buildings and contents insurance are two separate entities to landlord insurance, as the name suggests buildings insurance covers the structure whereas contents insurance covers possessions. The vast majority of expense associated with landlord insurance comes from the buildings you rent to your customers. Landlord insurance will cover the cost of all of the contents that belong to the landlord, this includes fixtures and fittings.
- Buildings Insurance: This form of insurance cover will usually protect the landlord against theft, vandalism, fire, leaks, subsidence and natural disasters such as floods or storms. It is important to note that as the name suggests, landlord insurance will only cover property owned by the landlord.
If tenants are looking for insurance cover for their own items they should seek contents insurance.
- Contents Insurance – will cover the policy holders household items against damage, loss or theft. Typically contents insurance will cover everyday items you would find in a property, for example electrical goods, furniture, clothes, carpets and home wear. .
Contents insurance can be broken down further to suit the needs of the policy holder. The most cost effective contents insurance is an ‘indemnity’ policy, this takes into consideration the age and condition of the contents. If a claim is made the value of the item is estimated and the policy holder will receive a sum which reflects this calculation.
The second type of cover is in effect a ‘new for old’ insurance policy which does not take into consideration the age or condition. This therefore means that the full retail value of the items will be payable to the insurance policy holder. Whilst this form of cover is generally slightly more expensive than ‘indemnity’ cover it is often seen as a more popular option. If items are particularly valuable separate cover maybe required, for example jewellery or antiques.
What Are The Benefits Of Having Landlords Insurance?
When letting a property to a tenant you take a risk, you can never be 100% sure that they will look after the property to the standard you desire. Often it is hard to make an assessment when meeting a potential tenant, you can never be certain that they will treat your property with the level of respect you desire. Most people rent out properties as a business venture, and as with any business venture that carries a potential financial risk, it is always advisable to consider insurance which can protect you from financial misfortune. This is the case with landlord insurance, even if you only own a single property.
I Want To Let My Home Do I Need Landlords Insurance?
If you have decided you would like to let your home, it is important that you inform you existing insurance company. If you fail to do so your existing policy could be classed as null or void meaning you would have no cover at all. It best to check with your current insurer as this may or may not be the case, it is possible that the potential tenant s have to meet a criteria in order to asses where they are suitable. When considering landlord insurance check with your existing insurer to see if they will cover you.
In legal terms liability refers predominantly to fault. The individual who is at fault is liable to another due to of his or her actions or failure to act to prevent an accident or incident. One example is in the case of a crime. The liability of the perpetrator of the crime may include providing restitution for damage to property or paying medical bills in the case of physical injury as a result of the perpetrator’s actions.
Another example of liability in the legal realm is a road traffic accident. The person who causes the accident, through action or omission, is liable to the injured party. Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain level of medical expenses, and may reimburse the injured party for legal fees if civil action is required. In accounting terms, liability describes an obligation. It refers to money owed to complete a transaction, debt that has yet to be paid, or products or services that have been paid for but have not yet been rendered. Two general classifications sum up these types of liability: long term and short term. Long-term describes payment made over more than one year, while short-term liability refers to debt paid within a year or less.
What Is Commercial Buildings Insurance?
When running a business from a property it would be wise to consider commercial buildings insurance, this type of cover differs in a number of ways from more traditional buildings insurance policies. Commercial buildings insurance means that your business fixtures, fittings, stock, transit, liabilities, money and potential interruption to business are all covered.
What Am I not Protected Against?
Landlord insurance will provide the policy holder with a wide level of protection, however there are some aspects to being a landlord that this will not cover. If for example your tenant experiences a burglary the contents of the property will only be insured if there is evidence of forced entry.If a landlord has the misfortune of renting to tenants that are untrustworthy and theft occurs of fixtures or fitting owned by the landlord this will not be covered by landlord insurance.
Are All Landlord Insurance Policies The Same?
As with the majority of insurance policies they can be tailor made and will vary from one company to another. There maybe an excess associated with the policy meaning that if a landlord claims the first few hundred pounds are payable and therefore exclusives of the claim itself. When seeking a policy of this kind it is important to seek the correct advice and explain clearly the nature of your position.
When seeking landlord insurance ito cover buildings on a commercial basis there are a number of procedures that must be followed to ensure that the cover remains valid. It could be necessary to have properties checked annually to make sure they are structurally sound, this goes for fixtures such as boilers – particularly if they are gas powered.
What Is Rebuild Value Insurance
Sometimes a landlord will need to make their own estimations of the value of a property. The rebuild cost can be found on the mortgage agreement of the properties deeds; it should noted that the cost of a rebuild will be associated with inflation. Landlords would be wise to periodically check that the insurance policy taken out covers the rebuild cost on an annual basis. Some insurance companies will do this automatically meaning that the premiums will adjust proportionately to rebuild costs.
To summarise, Landlord insurance is a necessity for any person that rents their property to tenants on a formal basis. Whether you own one property or ten, and whether you rent to friends and family, or to strangers, landlord insurance should always be considered. There are many risks associated with allowing other people to stay in your property, to ensure that you never pay for the carelessness or neglect of your tenants, you should take out a landlord insurance policy that is relevant to your situation.