Is landlord insurance cover really necessary? How are my landlord insurance premiums calculated? … Here we answer your four burning questions …
Do I really need landlord cover?
If you are a new landlord, you may be wondering why you need landlord cover at all. After all, wouldn’t an owner-occupier home buildings and contents insurance policy do instead? Tempting as it may be to go for a regular policy (especially as they seem to be advertised and available everywhere), the policy may end up being declared void if your insurer discovers that the property was in fact occupied by a tenant rather than an owner-occupier.
There may be a difference in price between the two types of policy, but this may be because of the different types of levels of risk that are perceived by insurers (with rented properties perceived as being more “risky” than owner occupied). However, with enough care and attention, you may still be able to find what you perceive to be the cheapest landlords insurance possible for your individual needs.
- landlords insurance may be necessary because without it, the risks posed by fire, flood, storm and other such disasters may pose a significant threat to the stake that you have in the property. For example, if the property was destroyed by any of these risks, would you be able to pay for the repairs from your own funds? Even if you could afford the repairs, it may not be desirable to meet them from your own pocket
- cover for legal action against you – if a tenant or one of their guests suffers an injury, loss or damage on or caused by your property, they may seek compensation from you. Even if costs are not awarded to them, could you afford the legal fees to fight your case?
- if you have a mortgage on the property, then you are not the only one with an interest in it being rebuilt or repaired should something happen to it. Given that the property also represents the lender’s security, they may be keen for you to have proper cover in place, and may even specify this as a condition of your home loan, even if it is just a very basic landlords insurance policy.
How are my let property insurance premiums calculated?
Let property insurance companies assess risks in different ways depending upon the risks concerned. Let property insurance is all about statistics and claims. If your property has factors that may attract more claims – for example, the property is in an area where there is known flooding – or you have a previous high claims history; then it is likely that your cover will cost you more.
Also, the following may also affect the cost of your landlords insurance:
- where the let property is located – all let property insurance companies use postcodes to assess this risk. A number of areas for example, with high crime rates, or in flood areas will affect the let property insurance premium or possibly the excess (the excess is the first part of any successful insurance claim that you are liable for);
- the sums insured – rebuild or reinstatement costs can increase let property insurance premiums if they are estimated. If the property is listed building or in a conservation area, it is exceptionally important to have the correct building sum insured for your let property insurance;
- the year your property was built could possibly influence the let property insurance premium, as older building materials and standards of construction have a chance of being a higher risk for let property insurance companies;
- the tenant type you let your property to can also affect the let property insurance premium. As a landlord, your tenants may be students; professionals, families; or retired people.
Each group may have their own advantages and disadvantages in the eyes of an insurer. Generally, houses that are occupied by students may be perceived as being at a higher risk of being damaged, because students may not take as much care of their accommodation as an older person. Working and retired people on the other hand may create an image of tenants who may treat the property as if it were their own.
If the profile of the kind of tenant that you let to changes due to market conditions, then you may wish to review your insurance needs and speak to your insurer.
Should I cover my contents?
When you think of let property insurance, your mind may immediately jump to structural issues, but you may wish to consider also what items of yours form the contents at the property. This may be particularly true if you let to students or own a House of Multiple Occupation.
In these circumstances where it may be common for a landlord to provide a bed and a desk, you may wish to make sure that your contents are included within your let property insurance.
This also applies to property in communal areas, too.
How often should I reassess my let property insurance cover?
If you have a portfolio of properties then you may already run a professional operation with an official “year end”. Accordingly, this may be an obvious moment to review your let property insurance. But you may also wish to diarise the issue for a month or so before your current policy expires. This way you may have enough time to consider the issue thoroughly before the policy expires or renews itself automatically with your original provider.
Get a landlord insurance quote here or give us a call during office hours on 01702 60630. Our team of experts are on hand to help find a policy meets your own unique needs in terms of cover and your budget.