Landlord’s insurance considerations

Probably the single most important consideration when it comes to landlords insurance is ensuring that the cover you choose adequately safeguards your investment in your let property and the risks your buy to let business may face.

Whilst the protection of a sizeable investment is likely to be at stake, it may not always be as straight forward as it seems in arranging the appropriate form of cover. Quite how complicated the subject may become begins to emerge in a detailed article on landlord insurance published by Landlord Zone.

It may be helpful, therefore to consider some of the main principles of let property insurance:

Landlords insurance versus home insurance

  • it is essential, for example, to distinguish the cover on your let property from the insurance that may be protecting the home you live in;
  • let property is subject to a host of different risks to one that is owner occupied – landlord insurance, therefore, is quite different to standard home insurance;
  • what this means is that if you are relying only on home insurance but in fact let the property, your claim may well be rejected;

Building insurance

  • nevertheless, it is true that landlord insurance also typically has at its heart the protection of the structure and fabric of the property against such potentially disastrous risks as fire, flooding, impacts, storm damage, and vandalism;
  • this, at least, is an element of protection shared both by home insurance and landlords insurance;

Subsidence

  • particular consideration may need to be given to the risk of building subsidence;
  • clearly, subsidence of the property’s foundations is a potentially serious problem and some of the causes and remedies are considered on a website dedicated to the phenomenon, the Subsidence Forum;
  • one of the issues to emerge through such forums and discussions is the difficulty frequently encountered when trying to insure a property in an area vulnerable to subsidence;
  • you may be particularly interested, therefore, in arranging your landlords insurance through us here at Cover4LetProperty, where our policies include such cover as a standard feature;

Landlords’ liabilities

  • some of the risks faced by landlords, however, may present equally threatening financial disaster as the loss of the property itself;
  • the question of a landlord’s various liabilities may prove critical in the event of a claim of negligence;
  • such claims may be made in the event of a tenant, a visitor to the let property or a member of the public who suffers personal injury or has their property damaged as a result of an alleged failure of the landlord’s duty of care to any such third party;
  • public liability – also described as property owner’s liability – may result in claims of such significance that cover against such risks is typically for an amount of £2 million or more;
  • there is a further area of potentially even greater liability if the landlord employs anyone else in the running of the buy to let business;
  • your duty of care as an employer extends to the safety of the individual against personal injury or ill health in the course of their employment or of damage to their property;
  • with very few exceptions, any landlord acting as such an employer is required by law to hold a minimum of £5 million employer’s liability indemnity;

Loss of rental income

  • as the landlord of buy to let property, the success of your business clearly relies on the continuity of rental income;
  • in the event of a serious insured event – such as fire or flooding, for example – your property may be rendered temporarily untenantable, and you suffer the consequent loss of their income;
  • as a safeguard against such losses, some landlords’ insurance policies offer compensation in that event – up to a predetermined maximum sum or for a specified period during which rental income is so disrupted;

Mitigation

  • whenever arranging any type of insurance, it is important to remember the contractual obligation you typically have towards the insurer to mitigate any loss or damage to the property insured;
  • even though you have been careful to arrange the appropriate type and level of insurance for your buy to let business, therefore, you are still responsible for mitigating the risks – such as maintaining the property in a good state of repair, for example, or taking all due precautions to ensure the safety of tenants, visitors and members of the public from any injury or loss.

If you have recently become the owner of buy to let property or are a landlord with an insurance policy renewal just around the corner, you might want to remind yourself of at least some of these important considerations.

The insurance that is appropriate for your particular buy to let business depends on your individual circumstances and the needs of your specific property. In many cases, therefore, you may it helpful to seek the services of an experienced specialist in the provision of landlords insurance.