Landlord’s Insurance is an essential protection for any property investor, from your first Buy 2 Let through to multiple location portfolios. Buying cheap Landlord’s Insurance is not always the best option, you need to carefully consider the cover you need and buy sensibly to protect your investment.
Here we have provided a series of Landlord’s Inurance FAQS to help property investors understabd some common issues when buying appropriate cover:
What is Landlord Insurance?
Landlord Insurance, also called Property Owners Insurance, is an insurance policy covering rental property. Usually it provides cover for the Buildings, Landlords Contents and Property Owners Liability, but it can also include more specific covers like Loss of Rental Income.
Why do I need Landlord Insurance?
Landlord Insurance is not a legal requirement in the UK (although a mortgage lender will insist that you have it) but it is recommended that you have an effective policy in place to protect your investment and your legal liability to others. Landlord Insurance will protect you as the landlord and in some respects your tenants against damage to the property and legal liability to visitors, contractors and passers by.
What is Property Owners Liability?
Property Owners Liability, is a cover that will protect you from any claims for third party personal injury in relation to your rental property. An example of this would be if a visitor to the property tripped over on a loose piece of flooring, or a roof tile falling and hitting them. The Property Owners Liability Insurance policy will pay the compensation and associated legal fees.
How much should I insure my rental property for?
The amount of Buildings Sum Insured you need (or Landlords Buildings Insurance) needs to be based on the Reinstatement Cost (Rebuild Cost) of the property and not the Market Value. The reason for this is that under your Insurance Policy your Insurers are agreeing to reinstate damaged property to a condition before loss and not agreeing to buy your property from you if it is damaged. Reinstatement cost is the cost to completely rebuild your property and must include things like any professional fees, debris removal, asbestos removal, cost of materials and labour. You can normally find this value, often referred to as an ‘Insurance Valuation, in the survey you had prior to the purchase of your property. Alternatively if you need any help assessing your correct Sum Insured, we offer all our Landlords Insurance customers a Reinstatement Cost Valuation to ensure you are properly insured.
What is Subsidence cover and do I need it?
Subsidence, Heave and Landslip is an additional cover usually associated with an additional premium. It provides cover for repairs to the property in the event of damage caused by ground movement, often caused by very dry or very wet periods of weather. Subsidence is when the ground beneath your home subsides or shrinks, often causing foundations to sink. Heave occurs when your property moves upwards and is often caused when the ground beneath your property becomes waterlogged. Landslip is when the land under your property moves, or slips sideways through falling, being on a slope or erosion.
What is Landlords Contents cover and do I need it?
Landlords Contents Insurance provides cover for the cost of repairing or replacing household items (like furniture and appliances) if they’re damaged, stolen or destroyed. It is important to note that Landlords Contents only provides cover for items owned by the landlord. Tenants will need their own Contents Insurance.
Should I have Loss of Rent cover?
Loss of Rent, or Rental Income, cover pays for the loss of rent when the tenant can no longer occupy the property following property damage. An example of this when following Fire damage your tenant cannot live tin the rental property whilst repair works are ongoing. Loss of Rent cover will reimburse you for the rental income during the period that the tenant cannot occupy your property, up to the maximum Indemnity Period.
What’s the difference between Rent Guarantee and Loss of Rent cover?
Rent Guarantee is a specialist cover that we can offer providing cover in the event that a tenant does not pay the rent, or if a tenant moves out and the letting agent is unable to find a new tenant in a reasonable time. The policy will pay the lost rental income, subject to a policy excess, for the loss of rent for the period of unoccupancy. Whereas Loss of Rent cover pays for the loss of rent only following damage to your Insured property.
Do I need to tell my home insurance that I have let my property to tenants?
You will need a specialist Landlord Insurance when you let your property. This is because conventional home insurance policies aren’t designed to cover rental activities and, in the event of a claim, your Insurer is likely to deny the claim (repudiate liability). You will likely find that your mortgage lender will also require that you have relevant insurance cover.
Do I need to tell my Landlords Insurance if my property is unoccupied?
Yes! If your property is going to be unoccupied for any period of time (usually 28/30 days. Check your policy for your insurers limitations on Unoccupancy) it is vital that you notify your insurance company. If you fail to do so and there is a claim (escape of water, for example) there is a strong possibility that they will deny the claim (repudiate liability) on the basis of Non-Disclosure.
Do I need to tell my insurance if the tenancy changes?
This would depend on the type of change. For example, if it’s a residential property and you have a new private tenant move in, your insurers do not need to be notified. However, if in the case of the tenancy changing from a private tenant to a Dept of Social Security or Student Let tenancy, insurers will require notification.
In the case of commercial lets the occupancy is vitally important to insurers. For example, if you have a commercial property currently occupied by a retail shop (let’s say a Newsagent) and at the end of their lease it changes to a Café, your insurers need to know this because the new tenant represents a higher risk of fire.
For further assistance call us on 08454310448