When letting a rental property, having the correct buy to let landlord insurance in place is essential.
Exploring the different types of insurance, finding answers to key questions like ‘Is landlord insurance mandatory?’ and understanding its many benefits is really important.
Ensuring you have the right coverage for your property investment is critical to protect your property and personal liability. Here’s landlord insurance, explained.
There are several types of landlord insurance that will protect your bricks and mortar investment. All cover against various potential issues, offering peace of mind whilst tenants live in your property.
Landlord insurance covers the activities, building and landlord-owned contents associated with a rental property. Malicious damage caused by tenants and help with legal proceedings are other worthwhile options.
Reading the small print ensures the main policy and any optional add-ons meet your (and your property’s) needs. For example, home emergency cover may not cover boiler repairs.
The main thing that isn’t traditionally covered by landlord insurance is tenants’ belongings. Landlords’ content insurance tends to only cover fixtures and fittings existing in the property that are owned by the landlord, such as the furniture in a furnished property. Anything belonging to the tenant will require a separate policy that covers their own possessions.
Landlord insurance broadly falls into five categories:
Covering against structural damage including subsidence, fires, vandalism and burst pipes.
Protecting the furnishings and appliances you own within the property, this insurance allows you to replace/fix damaged items.
Helping you to pay significant financial compensation if a tenant (or their visitors) is injured at the property.
Easing the stress of unforeseen emergencies, this insurance covers problems that need to be fixed as soon as possible. From lost keys and roof damage to sewerage issues, pests and central heating problems.
Reimbursing you should your tenant be unable to pay their rent. Rent guarantee insurance only covers the property whilst it’s inhabited but can fund legal costs towards eviction proceedings.
Whilst not a legal requirement in the UK, it makes financial sense.
Perhaps it’s tempting to avoid this expense considering there’s often marketing and agent management fees involved. However, no one can anticipate what will go wrong. Properties can soon generate high costs.
Each type of landlord insurance serves a different purpose, and you’ll probably want to choose multiple (if not all) of the above options. Individual policies vary, so check each policy for exclusions.
You may believe that having home insurance will cover your rental property. But this isn’t the case. Homeowners insurance will only protect your own home should damage occur to the property you’re living in. It won’t typically protect your buy to let investment.
This is because landlords receive income from their buy to let properties, something which is not permitted for regular home insurance. Yet, taking out landlord insurance is a positive step. It protects your liability, property and rental income for a relatively small cost.
As with any tenant(s), landlord insurance is essential to protect not only your liability but your property. Flooding is just one example of unforeseen damage that can require expensive repairs, no matter the cause. While some landlords may see renting to family as a lower risk option, there’s no way of knowing for certain that this is the case.
This depends on whether you own it as a freeholder or leaseholder. Landlords with a leasehold flat usually pay a portion of the building’s insurance through service charges. It’s wise to check the scope of this policy. If it’s freehold, you’ll need to arrange this insurance yourself.
Neither scenario covers you for emergencies, malicious damage or landlord-tenant issues. That’s why it’s prudent to research several types of landlord insurance beforehand.
Live-in landlords should protect their interests with insurance. Homeowner insurance won’t usually compensate for damage by the tenant. Likewise, becoming covered for claims of liability is time well spent.
Securing a landlord insurance policy is just like with any other kind of insurance. For many, insurance journeys begin on comparison sites where rates, features and terms can be compared directly.
After gathering several quotes from reputable insurers, you can narrow down the best options. Once your preferred choice has been taken out, you’ll move forward knowing you’ve protected your property and income with lower levels of risk.
You’ve worked hard to invest and should protect your property with landlord insurance. Considering buying for this purpose? Our Buy to Let Mortgages can combined up to 30 properties of the same security type on one application, we also accept first-time and accidental landlords. For more information and advice, you can also get in touch with your broker.
Subject to status. If you fail to keep up with payments on your mortgage a ‘receiver of rent’ may be appointed and/or your rental property may be repossessed.