Landlords are going through a tough time, but in a difficult market it could be more important than ever for renters to have adequate insurance in place.
What landlord cover is available?
Buildings insurance: Compulsory if you have a mortgage and a good idea if you don’t as it can cover the property if damaged by fire, flood or other events.
Contents insurance: Covers the contents that you own in the property (such as furniture, curtains and carpets) in the event that they are damaged or stolen.
The following cover is sometimes included in landlord insurance, or you can pay an additional premium to add it on:
Landlord’s liability cover: Provides insurance if the tenants have an accident in your property that could potentially be blamed on you, for example, if the tenant injures themselves on a faulty staircase and makes a claim against you.
Emergency cover: Insurance against any maintenance issue that may need immediate repair. These policies often include a 24/7 hotline service for emergency repairs to your electrical system, heating or hot water supply, security and windows. Tenants are usually able to call and arrange repairs themselves.
Rent guarantee cover: Covers your rental income if the tenants are unable to pay.
Legal cover: Insurance to cover legal expenses if you get into a dispute with your tenants.
Accidental damage cover: Covers your contents in the event of accidental damage by the tenant – this may or may not be part of your standard contents insurance.
Do I need specialist landlord cover?
Better safe than sorry – especially if you don’t have a large amount of cash to cover unforeseen expenses. Many buy-to-let investors, particularly first-timers, are currently stretched financially, as arrears levels testify.
Falling property prices have left many landlords in or approaching negative equity, and tighter mortgage criteria can make it difficult to remortgage to a competitive deal. This has left some buy-to-let investors stuck with an uncompetitive mortgage and others with a limited choice of mortgages.
Added to that is the flood of properties that have come onto the rental market in the last 18 months as frustrated sellers have decided to rent out their home until the market picks up – this increased choice for tenants has seen rents drop in many parts of the country.
Peace of mind
All in all, money is tight and the last thing landlords need right now is an unforeseen expense. While landlord insurance may seem like a luxury you can ill afford, the protection gained from covering yourself and your properties could outweigh the cost.
Also, specialist cover could be essential if your tenants (e.g. students, housing association tenants and asylum seekers) or the property would be excluded by mainstream providers.
Ultimately you should consider whether you can afford lump sum expenses like repairing a boiler at short notice, replacing the windows, or replacing all the furniture if the place becomes flooded or fire damaged.
What if your tenants were unable to pay the rent? Would you still be able to cover the mortgage payments? If not, landlord insurance can offer you invaluable peace of mind for less than you might think.
