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What is Landlord Insurance?



What is Landlord Insurance?

Landlord Insurance is a specialist type of cover that is typically needed for rental properties. Different policies will have different levels of cover and criteria included. A policy for your investment properties could include cover for:


· Loss of rent


· Contents


· Damage to your property


· Claims made against you if someone is injured or their property is damaged


What are the different types?

There are three main types of building insurance for rental properties:


1. Buildings


2. Content


3. Liability


Insurance might also include financial protection for lost rent or legal disputes with your tenants.


It is common for a Landlord to take out insurance on a property-by-property basis. However, portfolio policies and being more and more popular and are available to landlords who own four or more rented properties. This makes their lives easier as they can have all insurances paid on the same date every year and creates less admin.


Is Landlord Insurance Mandatory?

There is no legal requirement in the UK to have landlord insurance however, most lenders will refuse lending unless you have this in place.


Being a Landlord comes with a lot of risks and we wouldn’t recommend anyone thinking of purchasing investment properties skipped on getting decent insurance in place. Part of being a good Landlord is looking after your property, your tenants, your business and yourself.


Simple home insurance might not cover you if anything dangerous takes place, like a tenant getting hurt for example and seeking legal claims against you and your business. A normal home insurance policy simply will not cover you if you are renting your property to tenants.


According to Which, these are what can be included in all 3 types of insurance:


Types of landlord insurance


1. Buildings insurance

Buildings insurance covers any damage to the structure of your property, as well as the cost of rebuilding the home if it's irreparably damaged. You generally won't be able to take out a buy-to-let mortgage without proof of buildings insurance, and most lenders will specify the minimum level of cover they require in their terms and conditions. If the property is a flat within a block, a degree of buildings insurance will usually be part of a shared block policy, which you'll pay for as part of your service charge.


Buildings insurance policies typically offer cover against the following types of damage:


· Theft, vandalism, malicious damage Lightning, storm, earthquake damage (may be limited to the building itself rather than fences etc)


· Subsidence


· Burst pipes


· Fire or smoke


· Oil or water


Impact caused by accidents Importantly, there may be gaps in the buildings cover when it comes to damage that originates within individual flats - such as a fire or water leak. For this reason, it's very important to check exactly what's covered within the buildings policy and to consider taking out your own landlord policy to cover what's not included.


2. Contents insurance

Contents insurance can usually be taken out as a standalone policy or as an add-on to buildings insurance, and the level of contents insurance you'll need depends on whether you're letting a furnished or unfurnished property.


A contents insurance policy will cover the cost of repairing or replacing fixtures and fittings such as carpets, furniture and electrical items if, for example, they're damaged in a flood, and some policies can be extended to cover accidental damage to items.


Landlord contents insurance policies only pay out on items that you've provided in the property. Anything that belongs to your tenants, from everyday belongings to furniture, won't be covered, so tenants should take out their own policy too.


3. Liability insurance

Liability insurance covers you if your tenant or a visitor suffers an injury in your property. Also known as public liability cover, this insurance protects you financially against unforeseen accidents, but shouldn't be considered an excuse to not make the property as safe as possible for your tenants.


Liability insurance policies often have extremely high coverage limits stretching to millions of pounds, which could be necessary if you're held legally responsible for an accident and need to pay compensation.


Optional additional types of cover

Insurers might also suggest you review adding the below policies for your investment property. Rent Guarantee is something many Landlord may not have considered before Covid; it seems now like something you would never go without!


· Rent guarantee: This intends to cover your monthly rental income if there is an instance where your tenants do not pay their rent. This is usually an additional cost and there are several providers who are happy to help with this. If it is not included in your existing policy, it can always be added on and a decent letting agent should also be able to help you with this. You can usually make a claim if a tenant has not paid for one month. This is helpful so you do not have to wait months before you are able to claim and make use of this add on.


It is different to loss of rent cover, which only pays out if you are unable to let your property due to damage covered by your landlord building insurance, e.g. fire.


· Home emergency: This extra type of cover protects both you and your tenants when an emergency occurs. It might include things boiler cover for example, if there are issues with heating and plumbing systems within the property, door security, vermin and much more. Something that might also be very helpful to you, if you do live far away from your property investment area, is that you have access to a 24-hour helpline so you can arrange for emergency repairs to be carried out by qualified tradesmen. If you don’t employ a managing agent, home emergency cover can be invaluable.


· Key care insurance: If your tenants lose or break their keys, or they are stolen, key care insurance can cover you for any costs you have to pay out for a locksmith, replacement locks and new keys.

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