There are many different landlord insurance policies available, with cover usually falling into three main categories: landlord building insurance, landlord house insurance and landlord contents insurance. Policies can be taken out whereby a combination of all or some are included, but it generally depends on the provider.
It is worth noting that some landlord insurance companies will offer a discount if several properties need to be insured at once or certain discounts may apply such as reducing the policy issue fee. This could result in you, as the landlord, saving a lot of time and money.
Is It Needed?
Landlord Insurance is not legally required but is highly recommended. Properties can be worth hundreds of thousands of pounds and are usually long-term investments, which should be safeguarded.
All it takes is one unexpected incident to occur for your investment to suffer significant damage and if a landlord's insurance policy isn't in place, it could result in the loss of a considerable amount of money. As a landlord you should also consider having insurance in place to provide property owners liability to protect yourself against claims from your tenant who may hold you liable for any injury they receive from within your property.
Landlord House Insurance
A Landlord house insurance policy is recommended for anyone planning on letting a property. It provides cover for the buildings and or contents instead of a standard residential homeowners' insurance policy. The is because a standard house insurance policy generally doesn't provide as much cover as a specific insurance for landlords house policy would, e.g. you wouldn't have the additional cover, such as property owner liability, to provide cover against any claims your tenant may make against you for any injury or illness they receive within your property.
It is vital that you check your current household policy to see whether it provides cover for your property once it is let to tenants. Many policies actually exclude any cover once a property is let, which is why it is so important to arrange a specific landlords insurance policy to make sure, at the very least, your building is insured.
Landlord Building Insurance
As a landlord the largest investments you own are the let properties themselves and the rent money they generate. You could end up risking huge financial losses by not having let building insurance in place, and with lots of low cost policies on offer it should be considered as a must!
The usual cover provided can vary depending on your requirements and property details. Generally your policy will provide cover for fire, lightning, explosion, storm, earthquake, flood, subsidence, property owners liability, riot, escape of water, falling trees, theft, malicious damage, ground heave and land slip.
Landlord Contents Insurance
Landlord contents insurance can be added to buildings insurance policies for a small additional premium, which is quite popular among homeowners as they usually receive a discount when both contents and buildings insurance are included in the policy.
The cost of the policy will obviously depend on the value of contents you wish to insure. It is recommended, as standard, that the contents of the let property such as the carpets, curtains and other goods, be insured against risks such as theft, fire and flooding.
The cost of building insurance for landlords will depend on many different factors such as the property location, rebuild value and tenant type, e.g. your insurance premium may be much lower if you were to insure a building that has a low rebuild value of £40,000 compared to a property that has a rebuild value of £200,000. Location is another factor that can have an affect on costs. Living in a bad area (know to be a high crime risk) may mean paying more for your landlord building insurance.
Some insurers will apply a discount or a load to your policy based on the type of tenant you have in the property, for example it may work out cheaper to insure a property occupied by 1 professional person than a property lived in by several asylum seekers.
When it comes to arranging your landlord buildings insurance it is vital to remember to insure the let building for the rebuild/re-instatement value and not the sale price!
The re-instatement value should include costs such as the rebuilding of the property, the clearage of the site, surveyor costs, etc. The Internet can come in handy, as there are various online tools that offer an indication as to the rebuild value of your property. These tools are offered by companies like the Association of British insurers (ABI), although they cannot guarantee the accuracy of the results - this can only be achieved by having a professional survey carried out.