Landlord Insurance
It is highly recommended that landlords take out specific insurance for any properties they let out. A standard home buildings and contents policy won’t provide any cover for some of the risks that landlords face, such as loss of rent, damage to your property or contents by the tenant or your liability as a landlord.
In a recent survey carried out on behalf of an insurer, it was estimated that up to 40% of landlords have incorrect or, in several cases, no insurance in place…….
The main elements of a typical Let Property Insurance policy are:
Buildings Insurance
Buildings insurance covers the structure of the property against insured perils. Cover can be placed on an ‘all risks’ basis, or on a defined perils basis which is more limited in its cover. It is worth noting that the buildings MUST be insured on an accurate rebuild cost, not on market value or the price you paid for the property. Quite often the re-build value can be lower than the market value, and the insurer will only pay up to the rebuild value of the property even if you have insured it for more (and paid additional premium). You should be aware that your insurers will pay out less than the value of you claim if you under-insure your property or your contents.
Contents Insurance
If a landlord provides furniture, fixtures and fittings for tenants, these should be covered under the contents section of the policy. Importantly, this section does not provide cover for the tenants own contents - they should insure these themselves on a separate policy.
Loss of Rent Insurance
If an insured peril leads to the property becoming uninhabitable for a period, you will have a subsequent loss of rental income which can be covered under this section.
Tenant Default Insurance
This section can be added to many policies to insure against a tenant fails to pay their rent. You will usually need a formal tenancy agreement in place to take advantage of this cover.
Legal Expenses Insurance
Provides cover for legal fees associated with your rental property. Cover can include debt recovery, unpaid rent and tenant evictions.
Property Owners Liability Insurance
Protects you against claims made by a third party (such as a member of the public or a tenant) where your property has caused injury or damage, such as a roof tile falling and hitting a car.
Employers’ Liability Insurance
This is a legal requirement if you employ anyone. This provides cover in case an employee is injured in the course of carrying out their duties. The standard limit is £10m.
Terrorism Insurance
An automatic exclusion under any landlord insurance policy, Terrorism insurance is separately available to cover potential losses that might arise due to terrorist activity.
Unoccupied Property
From time to time a rental property may become vacant. When this happens, it is imperative that you advise insurers immediately. It is standard market practice that cover will be reduced at this point, and there will be an inspection warranty applied to the policy insisting the property is inspected regularly. Failure to advise the insurer of unnoccupancy will undoubtedly lead to any claim being disputed and unlikely to be paid.
Information supplied by Source Insurance Limited - www.thesource.co.uk
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