Is let property insurance essential?

Posted: 2nd Jun 2014

Let property insurance, in a legal sense, may not be mandatory.

Of course, if you have a buy to let mortgage on your property, then the lender may well have asked you to sign a legally binding document confirming that you have and will maintain, appropriate let property insurance in place.

At the time your mortgage was taken out, they may also have requested a copy of your landlord insurance policy.

That’s because they will be keen to ensure that their loan capital is well protected in the event that something unfortunate happens to your property.

If it is logical for a mortgage lender to seek to protect their investment in this fashion, then the same reasoning may dictate that it would be highly advisable for you to do likewise.

Even if you do not have a mortgage on the property concerned, it may be risky to try to do without landlord insurance.

There are many different names for landlord insurance, including things such as, landlords’ building and contents insurance, buy to let insurance and landlords’ protection insurance.

Essentially, all these types of policies will provide you with insurance protection for the structure of your building, its contents and possibly third party liability risks, arising from the fact that you have tenants and their guests on your property.

Deciding that this type of cover or any component of it is anything other than essential might be unwise.

One area where changing circumstances may lead you can be caught out in this respect is a change of property use.

Keep in mind that if you have previously occupied a property as an owner-occupier and had standard home buildings and contents insurance in place, that this cover will become invalid the moment you start renting your property out. That may even apply if you only rent out part of it, such as a couple of bedrooms.

In such circumstances, you will typically need to switch to landlords’ insurance to ensure continuity of cover.

Note that you may also be in contravention of the terms of any existing owner-occupier mortgage you have on your property and it may be advisable check the implications of change with your mortgage lenders in advance.

All things considered, having appropriate let property insurance may simply be commonsense.