If you are the owner of a buy-to-let property, one thing you are definitely going to have to think about is landlord insurance.
What is it?
Similar to home insurance, landlord insurance protects your property against losses due to fires, weather damage and theft. More traditional home insurance plans are not, however, sufficiently robust for covering buy to let properties. So landlord insurance was created to cater specifically to rental houses and flats.
What does it cover?
A common example of the difference between landlord and home insurance is that the former allows properties to go uninhabited for a longer period of time and still maintain coverage, so that landlords can keep their insurance during building work, or other lags between tenancies. Other differences include the fact that landlord insurance can cover things like non-payment of rent, or damages caused by tenants. Here are the main features of a typical landlord insurance plan:
Liability: Not all landlords are aware that they (and not the renter) are liable as property owners for third party damages, losses or injuries. This means that if a renter’s guest breaks their ankle tripping on a loose stair tread, it may be up to the landlord to pay the hospital bills or other compensation. Landlord insurance, however, covers you in cases where property owner liability is in question.
Building damage: Just like home insurance, this covers damage to the structure of the building due to natural and other disasters (fires, floods, lightning, etc.), but it has the additional perk of covering damage caused by tenants as well. It includes both repairs in cases of mild damage and rebuilding in the more dramatic cases. Experts agree that landlords should be realistic when evaluating rebuilding costs; undervaluing a property can save you on premiums, but you will lose out in the event of major damage.
Contents damage: "Contents" refers to anything that would fall out if you tipped the property on its side! Landlord insurance can also cover the cost of replacing or repairing furniture, decorations, and other non-structural features of the property. This part of landlord insurance plans becomes important if your rental is furnished. Items covered can include appliances, beds, sofas, carpets, curtains, wall hangings and more. However, items belonging to the tenant and brought by them to the rental property are not covered. If your tenant has questions about this, you can advise them to purchase their own tenant insurance.
Other features: Some landlord insurance plans cover you against loss of income in the event that your tenant proves unable to pay their rent. In certain cases, legal expenses are also covered to allow you to carry out eviction processes, or handle liability disputes with your tenant. Loss of rental income, in the event that the property becomes uninhabitable due to damage or other unforeseen events, is also covered by some insurance plans.
Just like other types of insurance, plans vary widely in terms of detail. So before investing in landlord insurance, be sure to consider your options carefully to make sure the plan you choose includes everything you are looking for.