Being a landlord is a rewarding, but sometimes challenging job, especially given the ever-changing regulatory landscape. One way to make life a little more secure and give yourself piece of mind is to take out a specific landlord insurance policy which, if chosen properly will cover you for things such as tenant rent default, property and possession damage and legal costs. In this article we will take a look at the benefits of landlord insurance and the types of cover that are available.
What is Landlord’s insurance
We all know, when we own a property that we need buildings and contents insurance to cover any damage to the structure of our homes or the property within it. This cover, however, will not cover a landlord for risks associated with renting a property out such as:
- Loss of rent
- Your possessions if they are damaged or stolen by a tenant
- Buildings damage
- Injury claims from a tenant or a visitor to the rented property
- Legal fees should you need to take any legal action against a tenant
- Emergency maintenance
Although having specific landlord insurance is not a legal requirement, quite often a mortgage provider on a buy-to-let mortgage will insist on it. Even if this is not the case, to ensure that you are covered for all risks associated with renting your property, it is highly advisable to have a suitable policy in place for all your rental properties.
Let’s take a quick look at the most common policy types.
Property Owner’s Liability Insurance
This is perhaps the most important cover that you might need and perhaps also the cover which is most often missing. This cover is there to protect you as the ultimate person responsible for the upkeep and maintenance of the property from 3rd party claims against you for any damage or injury suffered by a 3rd party. If, for example, someone visits your property to see the tenant and they are injured by a loose tile falling from the roof as it has not been properly maintained, they could sue you for damages. In this case, the Property Owner’s liability insurance would help cover the costs of that claim. When looking for cover, you need to consider the number of people in your property as the more who could potentially be injured, the more cover you will need.
Loss of Rent/Rent Guarantee Insurance
This insurance covers you for circumstances where a tenant has to move out of the property due to an insured event such as fire or flooding happening. In this case the insurance will pay the rent while the property is being refurbished. You will need to make a decision on how long you need this cover to last for should you need it. Note that this is different to rent guarantee insurance. Rent guarantee insurance covers you for when the tenant is unable to pay their rent due to financial difficulties. Both effectively cover you for periods when there is no rent coming in, but they are fundamentally different in terms of the situations that they cover so you would be sensible to ensure you have both types of cover. If your property is empty and between tenancies, quite often this is not covered by the insurance.
Landlord’s Contents Insurance
If you let a property that is furnished, you should consider ensuring that the insurance policy has landlord’s contents cover as your possessions might not be automatically covered. It is not the tenant’s responsibility to cover your belongings. Typically, this type of cover would insure your furnishings against floods, fire and theft. Make sure to check that accidental or malicious damage by the tenant is also covered as this is not automatic.
Landlord Buildings Cover
This is pretty much the same as standard homeowner buildings cover and will cover your rental property against structural damage.
Legal cover is there to assist with any costs associated with legal proceedings either against the tenant for rent defaults or evictions or against you as a landlord. Although no-one ever wants to take legal action, if it does need to happen then it can be very expensive.
We all know that things go wrong at exactly the wrong time, from losing our keys, to the boiler breaking down to blocked drains. Having emergency cover to cover these events will give both you and the tenants piece of mind. The last thing anyone wants is to have to wait weeks in winter for the boiler to be repaired.
Although no-one ever wants things to go wrong, your landlord insurance can help to give you peace of mind. Always make sure that your cover is right for the level of risk, cheapest is not always best. Remember you are protecting your investment and your business.