Five things to know about landlord insurance


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Landlord insurance is essentially an upgrade to traditional house insurance that takes account of the additional risk that the insurer sees in having tenants in your property.

It may not provide anything more than standard buildings insurance, which most people have on a property (and most mortgage companies insist upon) to cover for any structural issue that may arise.

In other cases landlord insurance will also provide additional cover for the policy holder to take account of other risks they may be exposed to as a result of renting out a property.

We’ve taken a look at five key things to know about landlord insurance:

 

 

  • Landlord insurance is not obligatory

 

It is not a legal requirement to take out landlord insurance, though some mortgage lenders will make it a requirement of a buy-to-let loan.

Mortgage providers will know your ability to make repayments on a buy to let property is likely linked to your ability to keep paying tenants in the property.

Certain landlord insurance policies will cover the lost earnings if for any reason the property becomes damaged and can’t be rented for a period, if you have a gap between tenants or your tenants fail to pay rent.

 

 

  • There are vastly varying degrees of cover

 

As with most forms of insurance, there are many different degrees of cover with landlord insurance and it’s vital to ensure you buy what you need.

Landlord insurance may or may not include any combination of these types of cover:

  • Buildings – protecting the structure and fitted fixtures within the building
  • Contents – insurance for belongings in the building as well as items such as carpets and curtains
  • Unoccupied property – offering payments if you have a gap between paying tenants 
  • Liability – to assist with costs if there is a legal dispute over the property
  • Rental protection – offering payments if the building is unable to be rented for a period due to, for example, structural damage.
  • Accidental damage – potentially offering cover for things like broken windows, damage due to DIY or carpet stains due to spills.

 

  • It may be necessary to upgrade general housing insurance to ensure you’re still covered as a landlord

 

 

While landlord insurance is not obligatory, it is usually necessary to inform your house insurance provider if you are renting a property – or even a room.

A rental property with a tenant in it, will often be seen as higher risk than an owner-occupied one. Therefore your insurance provider may deem that your premium needs to be recalculated.

The risk is inflated due to a sense that tenants may not take as much care of the property.

 

 

  • The type of tenants you have will affect your premium

 

An insurer is very likely to ask for some information about the type of tenant who will be living in the property and the answer may affect the premium.

If you intend to rent to students or people on benefits, for example, the landlord insurance premium may be higher, especially if you’re seeking cover for any periods where tenants fail to pay. These low income groups may be seen as presenting higher risk.  

 

 

  • Failure to provide working smoke alarms could invalidate the policy

 

Failing to meet certain statutory landlord responsibilities when renting out a property, such as providing smoke alarms, could invalidate your insurance.

Gas and electric items within the property may also need to be regularly checked by a professional.

 


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