A Guide to Buildings Insurance for Landlords

Have you just become a landlord? Or are you an experienced buy to let investor who has been growing their portfolio for years? Either way, buildings insurance for landlords may be an important thing to consider if you want to protect your buy to let UK property.

Rather than seeing let property cover as just another bill to pay, you may wish to bear in mind that having landlords insurance may be necessary to:

• abide by the terms of your mortgage;
• and protect your own pocket.

Mortgage requirements

If you have a loan secured on the buy to let property, it may be a condition of that mortgage that you have to arrange suitable buildings insurance for landlords. This is because the property represents security for the lender, should you default on the loan.

If the property is uninsured and goes up in smoke and you do not have the money to rebuild it, the lender would be left with virtually nothing to provide security for the loan.

When you took out the mortgage, the valuation you had done may have specified a valuation for the purposes of buildings insurance.

Adequate cover

As discussed above, if you are a residential landlord you may typically be obliged to insure the structure of the property. If the worst should happen and the property should burn down or be destroyed in another manner, the tenant would be left without a home. Accordingly, some residential leases may typically insist that the landlord must have adequate insurance in place.

It is also worth bearing in mind that there are some landlords insurance policies that provide cover for loss of rental income due to an insured risk. So, if we use the above example, if a fire destroyed part of your property, thereby making it uninhabitable, the policy would help pay up to a set amount of your loss of rental income for a set period of time.

Summary

Fortunately, getting buildings insurance for landlords is not just about keeping the lender happy. After all, if the property did befall a terrible fate, how would you afford to rebuild it without adequate insurance in place?

Likewise, if the tenant had to leave because the property became uninhabitable due to an insured risk such as fire or storm damage, they would also stop paying rent. Unfortunately, your mortgage would continue to fall due, so buildings insurance for landlords with loss of rental cover may seem very handy at this point!