Not a week goes by when we aren’t asked about landlord insurance and the importance of having adequate cover. Although this isn’t compulsory, some lenders make it a requirement within their buy-to-let mortgage conditions.
There are countless things that can go wrong in any property. It really does pay to have the right landlord insurance cover in the first place. Read on as we tell you everything you need to know about this subject…
Types of Landlord Insurance to consider
There are a lot of different elements to think about when looking into landlord insurance. It is very easy to just pick a cheap insurance that may cover you for 1 or 2 things. But it is really important you understand what insurance is out there first. You need to be confident that you have the right insurance policy in place for you and your needs.
Landlords’ buildings insurance
Building insurance is one of the main types of cover that a landlord will need. It is so important because it protects the bricks and mortar of your property. This often also includes replacing kitchens units and bathroom suites.
Note: some policies may also cover sheds, garages and other outbuildings. Before you take out building insurance you will need to know the rebuild costs of your property.
Landlords’ contents insurance
Contents Insurance can be another vital piece of cover. Particularly if your property is rented full or part-furnished. This insurance normally protects your beds, carpets, sofas, TVs and other similar possessions from theft or damage. It’s also possible to get extra cover for accidental damage in some cases. This includes anything from a smashed mirror to a coffee stain on an expensive rug. Look out for a policy that will replace your belongings on a “new for old” basis. This means your possessions will be replaced with shiny new ones, should you make a claim.
Remember: you don’t have to insure your tenants personal possessions as that is their responsibility.
Landlords’ liability insurance
Liability insurance can be added as an extra to most policies. It is often a requirement if you have a student or social housing. This will cover you against tenants who may try and sue you for an accident that occurs on your property.
This can be invaluable for protecting you in the event of injury or death on your property.
Loss of rent insurance
If your property becomes uninhabitable or you can’t rent it out for a certain period of time, missing rent can be protected. This is particularly important if you have taken out a large mortgage on the property. This is also useful if you are solely relying on the rent to meet other monthly repayments. If this is the case, it could spare you the agony of losing the property altogether.
Rent Guarantee Insurance
This is a valuable insurance policy for many landlords who want rental income protection. Landlord insurance with rent guarantee and legal expenses is a perfect combination for any professional or residential landlord. It provides cover if your tenant defaults and fails to pay the rent on your property.
For this insurance to be valid, your tenant(s) must have passed the relevant referencing process in advance. This includes proof of earnings and affordability. It also includes proof of ID and a credit check showing no CCJ’s in the last three years.
It is not possible to take this policy out once a tenant has defaulted.
Legal expenses insurance
You may also want to consider covering yourself for any legal costs following potential disputes with tenants. This includes evicting squatters and repossessing your property. This insurance can also cover the cost of defending you against any criminal action. Recovering any outstanding rent owed by your tenant can also be an option to consider. However you will need to check the policy detail for this (as it does vary).
Landlords’ home emergency cover
This covers the cost of arranging emergency repairs. This often includes: gas leaks, burst pipes, break-in or pest infestation at your property. It ensures a fully qualified tradesmen will be on hand to sort out household emergencies. This is normally 24 hours a day, 365 days a year. Policies typically cover call-out charges too along with labour and materials. It’s usually up to a maximum sum of £500 per claim.
Note: there can be excess payments to make each time an engineer visits. So make sure you check your policy very carefully.
How to chose your landlord insurance policy?
There are clearly a number of different insurance products to consider and think about. In many cases, the same insurer will offer you several types of cover. They may even bundle certain products together into the same policy for you.
There are often ways to save money on your landlord insurance policy, without having to make large sacrifices to your cover. You do however need to be mindful. You should not select the cheapest policy available just because ‘it will save you a bit of money’ upfront. Always chose the landlord insurance policy that offers the best value for money for the relevant cover you need for your property.
You will probably find that a huge number of insurers will offer landlord cover. This can even include buy-to-let mortgage companies. However we do suggest that you continue shopping around and using price comparison websites such as Go Compare or Money SuperMarket. These sites are always helpful when checking for current quotes within a certain market. They enable you to cross reference multiple quotes from a range of leading insurance companies. Specialist insurers can also offer simplified, straight to the point quotes.
Final Things to consider…
We strongly advise that your landlord insurance cover is set up in advance of letting out your property.
We would recommend that you take the time to seek out a policy that will protect you from both potential damage and also any loss of income you may experience when letting your property.
A typical household policy will not provide the level of cover that you require. You really do need a landlord insurance cover that will protect your asset(s). By having this in place, you should not be out of pocket if a major issue arises at your property.
No matter how reliable a tenant might be, your property may still be at risk of falling victim to a fire, flood or even theft. Whilst these risks are rare, they do happen. The question you need to ask yourself is ‘Do you really want to take that risk?’
As landlords ourselves, we understand the importance of a good landlord insurance and we would strongly advise anyone to make this a priority within the process of property letting. Other factors to consider when looking to invest in a buy to let property.
Want to know more? Feel free to give us a call today on 0115 981 9651 for a friendly, informative chat.