As the Money Saving Expert is quick to point out, landlord let property insurance – or landlord insurance as it is also known – is not a legal requirement, but if you do not have it, the considerable investment represented by your let property is in peril.
It is in peril because of the risks to which any let property is exposed and against which let property insurance is designed to offer effective cover and protection:
When you let your property, the standard home building and contents insurance which may have offered the protection you needed when you alone lived there is no longer sufficient.
Owner-occupiers and landlords
If you live in a property you own and nobody apart from you and your family are normally resident there, you will be considered to be an “owner-occupier” by insurance providers. Typically, non-paying guests staying over or using your property for a short period of time are not a problem. Your insurance will not be at risk, providing that there are no commercial arrangements in place in such circumstances.
However, the moment you start charging somebody for accommodation in a property you own, whether or not you live in it yourself, you have made a commercial arrangement. By law, you have become a landlord and you will also find that you have certain legal obligations.
The risks involved in offering insurance for a property vary depending upon whether or not it is owner-occupied or let out for the purposes of rental income. That means that typically there are two very separate and distinct forms of property insurance:
- owner-occupier; and
- let property insurance.
With tenants occupying the dwelling, the risks are of a different order and magnitude, so that specialist let property insurance is essential – indeed, if you rely on your standard home insurance when the property is let, you are likely to find any claim rejected.
That is why you need specialist landlord let property insurance.
Comparing let property insurance
You may be new to the buy to let business or you might have become an “accidental” landlord, having come into property that you decide to let. In either event, you might want to consider the protection offered by landlord let property insurance. Although you are not legally obliged to have it, let property insurance offers valuable safeguards for the protection of both your property and the business it represents.
Letting out a property for the first time may be a bit of a nerve-racking experience.
Making sure that everything is done and ready on time may be made a bit easier for you if you are able to compare landlord insurance and arrange your let property insurance online.
After providing a few details using our online facilities, we may be able to show you some buy to let insurance quotes tailored to your requirements, so you can choose and purchase online the one which you feel most closely matches your expectations. Or, you can give us a call if you’d prefer to discuss your quote with one of our specialist team.
Of course, not all landlords may require exactly the same levels of cover.
If you are letting your property out on an unfurnished basis, for example, you may not need landlord contents cover.
Even for those aspects of landlords’ insurance that all landlords may require though, like buildings cover and third party liability, there may be significant differences in the levels of cover on offer from different providers. So, taking some time to read through what’s on offer from let property insurance online may be important.
What let property insurance covers
Becoming a landlord is exciting and may hopefully turn out to be lucrative.
But there may be certain things that you may not have considered before. One of these may be insurance for landlords. Why is it likely to be so important and just what is let property insurance?
- at the heart of let property insurance – just as with your home insurance – is the protection of the structure and fabric of the building itself against such potentially severe risks as fire, flooding, storm damage, impacts, vandalism and theft;
- arrange your insurance through us here at Cover4LetProperty and the building insurance also typically protects you against the risk of subsidence and offers trace and access cover as standard – something you are unlikely to find with some other let property insurance providers;
- although your property is let – and your tenants are responsible for insuring their own possessions and belongings – let property insurance may also protect those contents you own;
- if a tenant causes malicious damage to your property or its contents, our policies also include as standard cover against such acts (up to set limits);
Landlord liability insurance
- the moment you let your property to tenants, you also assume responsibility for ensuring their health and safety in the dwelling;
- if one of your tenants, a visitor of theirs, some other caller at the property, a neighbour or a member of the public suffers an injury or has their property damaged through some contact with the premises you own, you may be sued for a substantial sum in damages – especially if someone has been physically injured;
- levels of landlords’ public liability protection may vary considerably, with some policies being more generous in this area than others – which might be important given the potential size of some court awards for damages;
- whilst let property insurance typically incorporates at least £1 million indemnity against such claims, in the case of policies arranged by us here at Cover4LetProperty, indemnity of up to £2 million is offered as standard with the option to go up to £5 million;
Loss of rental income
- whether you are a full or part-time landlord, the rent you receive from your tenants is a valuable source of income;
- that income stream is likely to be disrupted, however, following a major insured event which leaves your property temporarily uninhabitable pending repairs and reinstatement of any damage;
- let property insurance (as an optional add-on to your policy) may therefore provide for compensation for such loss of rental income – up to prescribed limits, of course, typically related to a percentage of your total sum insured.
Unoccupied let property insurance
If the property becomes unoccupied (by which insurers may typically mean that the property remains empty for 30 to 45 consecutive days or more), then insurers typically require you to notify them of this fact.
Failure to notify the insurer of a property becoming unoccupied in that period may result in an insurer refusing to pay a claim in the event of a fire, storm or other peril that may otherwise have been covered.
Circumstances in which such vacancies may arise include:
- problems finding new tenants or delays in them moving in;
- building or refurbishment work overrunning;
- legal proceedings like divorce or probate; etc.
At times like this, when your property is going to be empty, specialist vacant property insurance policies are available (not just for landlords, but for anyone whose property stands empty for 30 days or more. These might be people who are having an extended holiday or working away from home for a period of time for example).
Who needs let property insurance?
The discussion so far has offered reason enough for arranging specialist let property insurance and has focussed on the risks it covers.
But it might help to clarify just who needs the cover and why it is important to compare let property insurance, since it is also likely to be necessary in the following circumstances:
- even if you are only letting out a single room in the house you, too, continue to occupy (under the government’s Rent a Room scheme, for example);
- if you are letting friends live in your property or part of it, in return for them paying you a rent;
- if you are letting your property out only occasionally, for example, for holiday rental purposes during the summer months;
- in situations where your lettings are infrequent and sporadic, usually being done on a short-term basis in order to raise some extra cash when needed;
- whether your property is furnished or unfurnished;
- whether or not you have a formal written tenancy agreement in place.
The basic condition to keep in mind is that if you are using your property for the generation of any sort of rental income, then you need let property insurance.
As a general note, if you intend to change the use of your property – for example, you decide to let it out for a few weeks during the summer – you must inform your mortgage provider. Failure to do so could see you in breach of your mortgage agreement – we cover this off in a bit more detail further down this article.
Mixing and matching
Typically, owner-occupier and landlord insurance are not interchangeable.
There are no circumstances under which you can maintain full property cover through an owner-occupier policy whilst using your property to generate rental income.
Why two forms of cover exist
The risks associated with a let property are significantly different to those associated with one which is owner-occupied.
To take just one example, if you are letting your property out you will have both your tenants and their guests in your house or flat. That significantly increases the risks of someone making a claim against you under third-party liability provisions.
Your policy needs to provide cover that is appropriate for the way you are using your property. Insurance providers have two different policies in order to be sure that you are covered as required.
The mortgage dimension
We would also recommend that you keep in mind some additional points on this subject, linked potentially to your mortgage:
- if you have a mortgage on your property then the lender will typically have advanced the funds based upon the understanding that the property concerned is either owner-occupied or let (i.e. a buy-to-let mortgage). If you have an owner-occupier mortgage and start using the property for letting purposes, you may be in breach of your mortgage contract;
- even if you have a correct type of mortgage, such as a buy-to-let advance, your loan agreement will typically oblige you to maintain full and appropriate insurance cover on it at all times – meaning let property cover.
These are both powerful reasons why you should ensure you have landlord insurance when it is required.
Arrange and compare let property insurance online
With our help here at Cover4LetProperty, you may arrange and compare let property insurance online.
Understanding what is available in the insurance marketplace to help you protect the investment you have made in your property, may be important to the success of your letting business. A short time spent looking at options may then allow you to take finding let property insurance online, off your list of things to do.
As with all financial products, there may be some paperwork to review. Issues you may wish to pay close attention to include the amount of any excess in the event of a claim (the first part of any successful claim for which you are personally responsible), the exclusions or limitations incorporated within any policy, and what your obligations are under the buildings and contents insurance for landlords in order to keep the cover valid (for example, your duty to notify the insurer if the property should become vacant, to keep it in a good state of repair, to meet certain property security requirements, and so on).
We are always on hand to answer any questions or queries you have, so please feel free to contact us – we’d be delighted to help.