Landlord insurance tips

Some landlords are fully committed buy to let investors with a view to making their living from the business. Others might have found themselves to be an accidental landlord, thanks to a single property they might have inherited or one awaiting a decision on its possible sale. Either way you look at it, however, any landlord is likely to give priority to protecting the property with the appropriate form of insurance.

In order to understand why it is likely to be such a priority, it may be helpful to review insurance cover for landlords and suggest a few tips about what needs to be taken into consideration:

Get the correct landlord insurance cover

• probably the single most important thing to remember is that your standard home insurance policy is typically will not offer the protection you need once the property is let to tenants;
• when assessing risks, insurers need to know the purpose to which the insured accommodation is put;
• standard home insurance is designed for the owner occupier, but landlord insurance is necessary once the property becomes a business asset to be let to tenants – the risks are simply different;
• landlord insurance is a specialist form of cover  – and there is a clear distinction between this and the type of home insurance typically arranged by the owner occupier;
• failure to make this clear to your insurer is likely to invalidate your cover and – if you are deliberately misleading an insurer about whether or not your property is let – you may be prosecuted for the offence of insurance fraud;
• it is also important to note that if you have a buy to let mortgage on the property, then it may typically be a condition of your mortgage agreement that you have suitable property insurance in place at all times, to protect both you and ypur lender’s financial interest in the property. If you have the “incorrect” type of insurance (e.g. home insurance for a property that is let), this could also cause issues with your mortgage provider.

Elements of cover

Landlord insurance – or buy to let insurance or let property insurance as you might also see it described – of course varies in its precise details from one insurer to another.

There are, however, certain core elements to most such policies:

Building insurance

• the let property is almost certain to represent a hefty investment and one which you want to safeguard by protecting its structure and fabric through building insurance – against such potentially major threats as flooding, storm damage, fire, impacts, escape of water and vandalism;

Contents insurance

• by the same token, the landlord may have spent a considerable furnishing and equipping the let property and (often optional) contents insurance is designed to offer protection against loss or damage to those items owned by the landlord;
• responsibility for insuring possessions and belongings owned by the tenants, of course, is their own responsibility;
• some buy to let insurance policies also extend to cover, or offer the option of cover, against malicious damage to the let property or its contents by tenants – such as policies arranged by Cover4LetProperty and others;

Loss of rental income

• whether it is a large or small-scale project, letting a property is a business proposition, dependent for its success on maintaining rental income from tenants;
• in the event of an insured incident leaving the premises unfit for occupation by your tenants therefore, some landlord insurance policies typically offer at least some element of compensation for the resulting loss of rental income;

Landlord liability insurance

• the moment you become a landlord, you also take on a general responsibility for ensuring that your tenants come to no physical harm or have their property damaged;
• this is known as your duty of care and extends not only to tenants, but also their visitors and any other member of the public;
• if any of these suffers an injury or has their property damaged through some breach of your duty of care, a substantial sum in compensation may be ordered;
• to indemnify you against such claims, buy to let insurance typically includes landlord or property owner’s indemnity of at least £2 million;

Landlords’ statutory responsibilities

• it is important to keep in mind, however, that landlord insurance provides no defence against your failure to comply with other, statutory responsibilities and obligations you have towards your tenants;
• these include health and safety concerns such as the need for annual gas safety inspections – by a qualified Gas Safe engineer – safe electrical systems and appliances, compliance with national and local fire safety regulations, requirements for the installation of smoke alarms and, where appropriate, carbon monoxide alarms;
• you also have a responsibility for ensuring that any deposit taken from a tenant as security against damage and breakages is held by a government approved third party under the Tenancy Deposit Protection.

Although there remain a number of responsibilities and obligations which you continue to shoulder as a landlord, therefore, there are also many risks and perils against which specialist landlord insurance cover is available.