As a landlord, you should already be aware that buy to let properties require specialist buildings insurance cover, chiefly because of the perceived additional risk of having tenants. Your mortgage provider will require the building to be insured from the point contracts are exchanged on the purchase. But there are also a number of other things it’s wise to take cover for, to make sure you don’t find yourself out of pocket if something goes wrong.
Essentially, you need to make sure the insurance for your rental property is properly tailored to your needs. Most mainstream providers will cover most types of rental – apart from HMOs (Houses in Multiple Occupation), which require a higher level of cover as they’re considered higher risk than a single let.
As standard, your landlord policy should include cover for:
- The structure itself and its fixtures to be repaired, replaced or rebuilt. That’s everything from repairing minor damage to the fabric of the building, through to rebuilding a property that’s been completely destroyed.
- Burst pipes caused by freezing conditions
- Flooding & fire damage
- Accidental damage to drains, pipes, cables and tanks that convey services to/from the property
- Loss of rent following an insured event, such as a fire or flood
- Accidental damage by your tenants and their guests
- Claims made by a tenant, visitor or tradesperson who has been injured as a result of a hazard in the property (public liability).
(Note: If the property is a flat, you shouldn’t need buildings insurance, as it should be taken care of by the freeholder and the cost included in your service charge. Just remember to inform the freeholder the flat’s being let so that they can tell their provider.)
A lot of specialist landlord policies also include the following, but do check, in case you need to add them to your policy or take out separate cover:
- Malicious damage and theft by your tenants or their guests
- Alternative accommodation, in case your tenants need to be rehoused for a while if the property suffers damage
- Legal expenses.
And it’s worth considering insurance for:
- Rent, in case your tenant defaults. May providers will offer policies that cover up to 12 months’ rental payments as well as the cost of evicting the tenant.
- Contents, if you’re letting furnished. (*Note: while you’re not under any obligation to do so, it’s good practice to remind your tenants that their possessions are not covered by your insurance and they will need to take out their own contents policy.)
- Equipment breakdown, if your let includes white goods
- Glass & locks replacement
- Boiler repair or replacement.
If you have a number of properties, you should be able to reduce the average premium cost for each property by taking specialist portfolio insurance, which the majority of providers now offer. And if you’re in any doubt as to whether it’s worth having insurance, take a look at the top ten claims made by buy to let investors:
(source: This is Money.co.uk )