Any property owner is likely to have an interest in protecting that asset with appropriate insurance. This is no different for the buy to let landlord, who is interested not only in the protection of the structure and fabric of the building, but also additional risks and perils which may threaten the business itself.
Choosing the most suitable landlord insurance is important for the protection of the property and the business, but its cost is also central to that most critical equation for the property owner – maximising the income from rents, whilst at the same time minimising the expenditure on running the business.
Here at Cover4LetProperty, we may help to ensure that you arrange the most suitable insurance for your buy to let business – with premiums that are also competitively priced.
What are some of the factors likely to be involved in choosing the appropriate insurance you need as a landlord?
- probably the very first point to be made is that if you have property let to tenants it is landlord insurance you need and not the ordinary home building and contents insurance typically arranged by the owner occupier of a dwelling;
- let property faces different risks and perils to those of a home occupied only by its owner, and the insurance needs to reflect this difference in use;
- it is an especially important consideration because if you are relying on regular home insurance for an owner occupier but are in fact letting the property, any subsequent insurance claim might be rejected by your insurer;
Your let property
- at the heart of your landlord insurance, of course, is likely to be protection of the structure and fabric of the building itself against loss or damage – and your choice of suitable cover is almost certain to reflect this fundamental need;
- the sum for which the building is insured needs to anticipate a worst case scenario in which it is totally destroyed in a major incident – a fire, let’s say;
- therefore, it is important that a sufficient level of cover is in place to allow for the reconstruction of a completely new property of the same standard as your insured property;
- reconstruction costs are not the same as the price which you paid for the property, nor even its current market value, but the actual cost of rebuilding the home on the existing plot, taking into account any investment you may have made in improving the property – these might have included the energy efficiency improvements government has required you to make under recent “green tax” changes;
- the scope and extent of any cover for the contents you own in your let property also needs to be suitable for your particular needs;
- if the accommodation is furnished, contents insurance needs to reflect the cost of replacing all those furnishings, but if there are little more than carpets and curtains you fitted, then the most basic contents insurance may be sufficient;
Loss or rental income
- if a major insured event leaves your let property temporarily unusable by tenants, you stand to lose the rents you otherwise collected or have to find them alternative accommodation elsewhere;
- compensation for loss of rental income, or the provision of alternative accommodation, following an insured incident is commonly incorporated into landlord insurance policies;
- but the level of compensation or the period for which alternative accommodation is paid may vary quite widely from one insurer to the next – are the prescribed limits likely to be sufficient to meet your needs or potential loss of income;
Malicious damage by tenants
- depending on the types of tenant you may have – and even with the most careful selection procedures in place – there may be a risk of tenants causing deliberate malicious damage to your property or its contents;
- not all landlord insurance policies provide cover against such risks (ours do!), so if you have any concerns that such damage may be committed, you might want to ensure that the cover you choose includes malicious damage by tenants;
Landlord liability insurance
- do you have suitable and sufficient cover against claims alleging your negligence as a landlord and property owner;
- you owe a duty of care – not only to your tenants and their visitors, but also your neighbours and other members of the public – to make sure you have taken all reasonable precautions against their being injured or having their property damaged in some way connected with the property you own;
- indemnity against such risks is typically provided by landlord liability insurance;
- do you have sufficient cover in this regard – at least £1 million of indemnity is generally considered a minimum.
Choosing suitable landlord insurance is important to protecting your let property, its contents and the buy to let business you run. When assessing whether you have appropriate cover to meet your needs might focus on these particular areas of concern.