Is It Worth Having Landlord Insurance?

With some landlords feeling the financial pinch, a small minority of ill advised or inexperienced landlords are attempting to reduce costs by cutting vital corners such as on repairs or worse, on their insurance policies.

As the owner and landlord of a buy to let property, adequate insurance is required to protect the fabric of your asset before even beginning to consider renting it out.

The Buy To Let mortgage provider will normally insist that the property owner should have buildings insurance in place upon the purchase of the property, some lenders will also insist on contents insurance to cover the fixtures and fittings.

What about landlord insurance?

A growing number of mortgage providers now beginning to insist that landlords take out a specialist landlord insurance policy in addition to the normal buildings and contents policy.

Landlord insurance is like any other type of insurance product as in the amount cover and liability varies from one policy to the next. For Example: Landlord A might want to include things like ‘accidental damage to fixtures and fittings’ and Landlord B might not, and so on.

The more inclusions (items to be insured) that are added to the policy, the more expensive the annual insurance premium becomes, nothing new in the world of insurance, however the landlord is paying for peace of mind.

With UK and overseas investors already queuing to invest in the UK Private Rental Sector (PRS) the landlord insurance market has seen the majority of the big insurance companies offering both Buy To Let property and Landlord insurance policies.

It is possible to purchase a basic policy that covers the contents, fixtures and fittings that belong to the landlord for a small monthly cost. This can cover items such as carpets, curtains, light fittings, windows, doors, cookers and white goods, and any other furniture are all insured against accidental damage and theft caused by the tenant.

Policies should also cover damage caused by flooding and fire, loss of rent through the property being deemed uninhabitable and the cost of alternative accommodation for tenants while the property is being repaired.

The cost of a fully comprehensive landlord insurance policy that covers most eventualities can vary depending on the value of the property and the exact terms and conditions of the insurance company and may result in a large annual financial outlay but when you consider the cost of not having landlord insurance….

Example

Tenant accidentally sets fire to something on the hob and the fire engulfs a section of the kitchen before the fire service get there. The property is deemed uninhabitable and the tenants are forced to temporarily relocate.

A regular homeowner buildings and contents insurance policy may cover the repairs and the cost of a new cooker, although some insurers may not pay out on the basis that the damage was caused by a tenant in rented accommodation. This means that while the damage is being repaired the landlord is out of pocket, missing out on rental payments.

A good landlord insurance policy can include rent payments up to 36 months, and help cover the cost of alternative accommodation for your tenants (if the cost is higher than the rental amount they are paying you). This means that not only is all repair work paid for, the landlord won’t lose out on vital monthly income.

Landlords need to consider tailoring the landlord insurance policy to their exact needs covering the most common tenant-induced mishaps. Some insurance companies insist knowing the employment status of the tenant too, and require notification should the tenants circumstances change. This can also affect the insurers decision should they be forced to pay out.

Always check the small print of the policy documents.

It only takes one careless moment from a tenant to prove that the overall cost and benefits of having the right landlord insurance far outweigh the stresses and cost of not having it.

Legal4Landlords offer a range of specialist insurance products including Residential Landlord, Un-Occupied Buy To Let, Landlord Commercial, Portfolio and Tenant Contents insurance policies as well as Rent Guarantee Insurance, providing landlords with much needed peace of mind and making sure that the rent will be covered.