The implications of landlord insurance

Being a responsible landlord typically involves thinking about landlord insurance.

This is to protect two different sets of interests – yours (perhaps including those of your mortgage lender) and any tenants you may have.

Your interests

As a landlord, you probably have a great deal of capital tied up in your property.

Having the appropriate type of landlord insurance may make sense, unless you enjoy the prospect of putting that capital at risk.

There are three main components to think about when considering let property insurance:

• the building itself plus the fixtures and fittings;
• the contents – particularly important if your property is rented out furnished;
• third-party public liability insurance – to protect you should your tenants, their guests or a passer-by, be injured (or their property damaged) as a result of your property.

This cover is quite distinct from similar cover that may be provided by an owner-occupier home buildings and contents insurance policy and you cannot, therefore, use owner-occupier policies for a property that you’re renting out.

Rented-out properties have a different risk profile and landlord insurance is designed to cover that.

Unoccupied property insurance

Another category of let property insurance may come into play if you plan to leave your property unoccupied for any length of time.

If it is unoccupied for a period greater than 30 consecutive days, you may have invalidated a standard let property insurance policy.

That is because insurance companies typically regard empty properties to constitute a higher risk than those that are occupied.

That arises from things such as burglars preferring them because there is less risk of interruption. It’s also possible that an initial small problem such as a minor leak in a pipe may become increasingly serious because there is nobody present to notice it.

For all these reasons, insurers typically require that you make special arrangements in such situations and that is called unoccupied property insurance.

This may also apply to traditional owner-occupied policies.

The tenants

Some tenants may expect to see that you have appropriate third-party liability cover in place. They may take comfort from the fact that you have and, as a result, be a little bit more inclined to rent your property.

Playing it safe

Having buy to let home insurance may not only be sensible – it may be mandatory.

That may happen if you have taken out a buy-to-let mortgage in which case the lenders may insist on seeing evidence that you have the appropriate forms of cover in place before advancing you the loan.

All things considered, having appropriate landlord insurance just might be a good idea!