If you’re considering renting out a property you own, think carefully about what insurance you will need. There is plenty that can go wrong when you give tenants the run of your house, you need to be protected against it.
Accidents can happen
They might spill red wine on the carpet. Perhaps they’ll leave the bathroom taps running, and flood the property (if it’s a flat, they might flood the neighbours’ as well). Or they could forget to close a window or lock the doors, so that burglars trash the place – or even start a fire that burns the place down. When you become a landlord, standard buildings and contents insurance is no longer enough. If you fail to tell your insurer that you have rented out your property, they will flatly refuse to pay any claim you subsequently make. You therefore need specialist landlords insurance.
Whether you are renting out your home, or building a portfolio of buy-to-let properties, you will have a lot of money tied up in property. So don’t just find the cheapest deal you can, check the policy gives you all the protection you need. Landlord insurance comes in several parts, so you need to work out whether you need all of them.
Landlord buildings insurance.
This is a must-have, because it protects the bricks and mortar of your property. If you suffer a flood or fire, buildings insurance will cover all the rebuilding costs, giving you peace of mind. Many buildings policies offer unlimited cover, so you don’t need to estimate the rebuilding costs of your property.
Landlord contents insurance. Another vital piece of cover, particularly if you rent the flat furnished, because it protects your beds, carpets, sofas, TVs and other possessions from theft or damage. Look for a policy that will replace your belongings on a “new for old” basis. You don’t have to insure your tenants’ possessions - that is their responsibility.
Landlord liability insurance. Personal injury claims have soared in recent years, partly thanks to ambulance-chasing lawyers, who tout for business from people who have suffered an injury or accident, to persuade them to make a claim for legal compensation on a “no-win, no fee” basis. Some claims have topped £100,000, and although most average around £5,000, you should still consider protecting yourself against litigious tenants. Landlord liability insurance typically offers cover up to £2 million as standard.
Loss of rent insurance. If your property is accidental damaged or destroyed, and you can’t rent it out, this insurance will replace the lost rent. This is particularly important if you have taken out a large mortgage on the property, and are relying on the rent to meet the monthly repayments, in which case it could spare you the agony of losing the property altogether. Legal expenses insurance. This covers your legal costs following disputes with tenants, including evicting squatters, repossessing your property and any other disputes with tenants, including defending you against any criminal action. You can also extend your policy to cover the legal costs of recovering any outstanding rent owed by your tenant. Landlord home emergency cover.
This will cover the cost of arranging emergency repairs following, say, a gas leak, burst pipe, break-in or pest infestation. Policies typically cover call-out charges, labour and materials, maybe up to a maximum sum of up to £500 per claim. It ensures a fully qualified tradesmen will be on hand to sort out household emergencies, 24 hours a day, 365 days a year. That is clearly a lot of insurance. Don’t panic, some of it isn’t that expensive, for example, legal expenses cover will typically cost you around £50 a year.
And in many cases, the same insurer will offer several types of cover, or bundle them together into the same policy. But don’t just go for the cheapest deals you can find. Renting out your property to strangers can be a risky business, and you want to be properly covered if something goes wrong.