As a landlord you'll know just how important it is to look after your investment, and that means finding the right insurance. While the big name aggregator websites dominate marketplace for the majority of domestic insurance products, they are still way off the mark when it comes to Landlord Insurance.
Why? Because landlord insurance isn't a single product, but rather a collection of different ‘insurances' which need to be carefully tailored to each landlord's individual needs. It's something that humans are much better at than computers, and with the help of the right broker you can expect a competitive insurance package in a single easy-to-manage policy.
Landlords should consider the following elements of cover:
Mortgage lenders insist on buildings insurance as a bare minimum to cover any costs involved in rebuilding your property if the worst happens. The sum insured should reflect the rebuild cost as set out in your buildings survey, although you do occasionally hear of short-sighted landlords who undervalue their property in a bid to cut premiums - not a good idea.
As a landlord you owe a ‘duty of care' to your tenants (and anyone visiting your property) which means that you are personally responsible for everything from falling slates to dodgy wiring. Landlords Liability Insurance is designed to safeguard landlords against claims of negligence relating to the property and is a standard benefit of Buildings Insurance. Expect provision of at least £2 million.
Landlords operating at the top-end of the lettings market, with fully-furnished properties, might be wise to consider full Contents Insurance. It works in exactly the same way as standard Home Contents Insurance with the option to include provision for Accidental Damage.
Landlords may be surprised to learn that a number of Buildings Insurance policies include ‘free' Contents Insurance of up to £5,000 to cover household basics such as: carpets, curtains and white goods. Not all Buildings Insurance policies offer complimentary contents cover, but you shouldn't have to look too far to find one that does.
Rent Guarantee Insurance
The ‘current' economic climate has been with us for as long as anyone can remember and unfortunately the financial forecast remains distinctly frosty. With unemployment figures climbing and the government capping benefits; the chances of tenants defaulting on rent have never been higher.
The country as a whole is tightening its belt and that includes trusted tenants who have previously paid like clockwork. Landlords can at least get some protection and peace of mind with Rent Guarantee Insurance.
Rent Guarantee Insurance is designed to cover your bills if a tenant is unable to pay their rent. It provides a financial lifeline covering mortgage payments for a given period as well as legal expenses incurred in eviction. If you are a landlord considering Rent Guarantee Insurance, make sure you choose a policy which offers the following:
Expect to pay: for all the above benefits don't pay more than £140 per annum.
Loss of Rent Insurance:
There's a great deal of confusion about Loss of Rent Insurance, and it's largely thanks to a ‘questionable' marketing ploy adopted by a number of the biggest names in the business. Loss of Rent Insurance covers income lost if your property becomes uninhabitable and your tenants are forced to move out while another claim is being honoured.
In plain English this means that your underwriter will payout while your property is being made habitable again (for example: after a flood or a fire) and it shouldn't be confused with Rent Guarantee Insurance.
While some unscrupulous providers advertise Loss of Rent Insurance as an extra it's actually a standard benefit of your Buildings Insurance. Payouts vary, but you can reasonably expect up to 20% of the value of the insured property.
Expect to pay: nothing as it's already included in your buildings cover.
Legal Expenses Insurance:
Purchased as a stand-alone product (or bundled-in with Rent Guarantee Insurance) Legal Expenses Insurance is designed to cover the costs incurred if a landlord has to go to court in order to take legal action.
As a landlord you face any number of potential legal hurdles, and as anyone who's ever been to court knows; solicitors' bills tend to be eye-wateringly high. Legal Expenses Insurance covers a variety of circumstances from costs incurred in defending your reputation to disputes with tenants and suppliers.
Expect to pay: for a policy providing up-to £100,000 (for any given claim) don't pay more than £35 per annum.
Home Emergency Insurance
As a landlord you've got enough headaches without being dragged out of bed in the middle of the night to deal with a crisis with one of your properties. Home Emergency Insurance gives your tenants round-the-clock access to a telephone helpline and a network of qualified tradesman who will turn-up and fix the problem without charge. Make sure you choose a policy where there's no excess to pay and one which won't affect your other property insurance premiums.
Expect to pay: cover is surprisingly affordable and shouldn't be more than £40.00.
Unoccupied Property Insurance
Just because your property isn't occupied doesn't mean that it isn't an insurance risk. In fact an empty property may be more vulnerable to certain claims, such as: burglary, vandalism and storm damage. Most insurance providers regard a property as being ‘unoccupied' if nobody has lived there for 30 consecutive days, whereby standard insurance becomes invalid. So if your rental property is likely to be empty for more than a month (for example: during renovation or while sourcing new tenants) you'll need to arrange additional cover with a Specialist Home Insurance provider.