Landlord Insurance

All landlords require insurance, irrespective of the size of their portfolio, a significant amount of capital is likely to be tied up in the property or properties and insurance can help protect the rental income stream and investment asset.

Buy to let insurance overview

Buy to let insurance is a combination of covers packaged together by insurers to provide landlords with the essential components to ensure that their investment is adequately protected. The following is a summary of the typical insurance policies which make up a landlords insurance policy.

Buildings Insurance

The building itself is insured against most risks such as flood and fire for the cost of repair or rebuilding. Even risks such as terrorism or subsidence can normally be purchased as optional extras for added security from most insurers.

It is important to remember that when you declare the value of your property you are actually estimating the cost of rebuilding it should it be totally destroyed (this is what insurance companies call a total loss). Most insurance companies work out a rate to charge the landlord based on the location of the property and then apply it to the amount specified to rebuild the building (the Buildings Sum Insured).

Landlord Contents

For a landlord insurance policy when an insurer talks about insuring contents they are not talking about the tenant’s contents. Insuring these is the responsibility of the tenants themselves and can be done through a normal home insurance policy. The contents that you can insure are items that you own in the property but which may become damaged such as carpets, sofas, tables, chairs and pictures if you are renting the property as furnished.

Landlord Liability

As a landlord you are responsible for the safety of the property that your tenants are living in. This means that should your tenant harm themselves due to something dangerous in the property they can make a claim against you for damages. For example, a tenant may electrocute themselves on a faulty light switch and badly burn their hand as a result. The Landlord Liability cover will pay for any damages that are awarded to the tenant as well as all legal costs.

Rent Guarantee insurance

As a landlord however good your tenant you are always exposed to the risk of non payment of rent. In the event your tenant fails to pay the rent you are able to take out insurance to cover this eventuality. Insurance companies will cover your rent depending on the circumstances and level of cover you have. Policies will cover your rent until end of the tenancy, expiry of the policy or until you gain possession whichever is soonest. Some policies will even cover your vacant period, again depending on circumstances and level of cover.

Can I insure my tenant’s contents on my landlord insurance policy?

You can only insure your own contents on your landlord insurance policy. Your tenants must take out their own insurance should they wish to protect their contents. The reason for this goes back to one of the principal rules of insurance, which is that the entity that is being insured must be owned or directly effect the person who is taking out the insurance contract.

Things to look out for:

• Optional covers - Optional covers such as accidental damage may be included as standard in the cover by some insurers. Other insurers charge you an additional premium. When comparing quotes make sure you compare the same level of cover
• Excess - Ensure you are aware of the excesses that apply to different types of claims with different insurers. This may influence your decision on which cover to buy
• Tenant type - Insurers may not cover certain types of tenants, such as students, while others will. Make sure the tenant type input accurately reflects who will be renting the property
• Property type - Different insurers cover different property types. Make sure you accurately describe your property type
• Exclusions - Read your policy documents and any exclusion that may apply. Make sure these will not affect you. There’s nothing worse then thinking you’re covered for something and then finding out you’re not

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