What is Landlord Insurance and what does it cover?
Letting property in north London continues to be a lucrative investment. But it does come with its share of risks which is where landlord insurance comes in. There is insurance available to mitigate against all the various risks associated with letting out residential property. Landlords must judge which are necessary for their property and situation.
What is landlord insurance?
Landlord insurance covers a property owner for the risk of financial loss associated with letting residential property.
What does landlord insurance cover?
There are different types of landlord insurance to protect against different risks. Policies will vary and cover different things. All-in-one packages, provide building and contents cover in conjunction with the extra cover for risks such as public liability and loss of rent. Landlords with a basic policy covering the building and contents could opt to purchase additional insurance cover.
Building cover for landlords
Landlord buildings insurance covers the cost of repairing or rebuilding the property if the structure is damaged or destroyed. Buildings insurance can include fixtures such as bathroom furniture and flooring. If you own a leasehold flat, the building might be insured by the landlord who owns the freehold. In this case, the insurance policy should specify the aspects of the building for which the property owner is responsible.
It is advisable to add malicious and accidental damage to landlord buildings cover.
Contents cover for landlords
The amount of cover required depends on whether the property is rented furnished or unfurnished. Landlords only need to cover the contents they own in the property. Tenants are responsible for insuring their property.
Accidental damage and malicious damage
Accidental and malicious damage can be included in landlord building or contents insurance, usually as an optional extra.
Need a Property Valuation?
Looking to Sell or Let Your Property? Book Your Free Property Valuation
Accidental damage covers such things as a tenant spilling a drink and staining the carpet or causing water damage by leaving a tap running. Malicious damage covers the cost of repairing and replacing items deliberately damaged by tenants, their guests or anyone unlawfully on the property.
Landlord liability insurance
Liability insurance protects landlords from compensation claims made by a third party such as a tenant, visitor, or tradesperson. For example, if the tenant tripped on a loose bit of flooring landlord liability insurance would pay the compensation amount as well as legal fees.
Cover for loss of rent
Loss of rent insurance covers landlords for loss of income if their property becomes uninhabitable due to an insured event (e.g. a fire or flood) and their tenants are forced to move out.
Rent guarantee insurance
Rent guarantee insurance covers landlords for loss of income if the tenants don’t pay their rent. On average, it takes 5-6 months to evict a tenant, insurance will cover lost rent during the time it takes to regain possession.
Cover for legal expenses
Landlord legal expenses insurance provides legal advice and cover for legal costs should a dispute relating to the property or tenants arise. This is often included in liability insurance or rent guarantee insurance or can be purchased as a separate product.
A vacant property can be more at risk of vandalism or burglary. If a property is unoccupied for more than 30 days at a time, ordinary landlord insurance can become invalid. Unoccupied property insurance will cover the building and contents for extended periods where there is no tenant.
Home emergency cover provides emergency assistance for landlords if their property’s plumbing, drainage, heating or power supply fails, or if damage to the doors or windows compromises the security of the property. The insurer will be available 24 hours a day and arrange for a contractor to secure the property and prevent further damage. Policies will often include an allowance for temporary accommodation for the tenants.
Do I need landlord insurance?
While landlord insurance is not a legal requirement, building insurance is often a requirement of mortgage lenders.
In a furnished or partly furnished property, it is a good idea for the landlord’s contents to be insured, especially if there are items which would be costly to replace.
It is up to the individual landlord to decide whether liability insurance is necessary, but it is included as standard in a lot of landlord insurance policies and many landlords decide they need it. Accidents can happen, and as landlords have a legal responsibility for the health and safety of their tenants, they can be held responsible.
How much does landlord insurance cost?
The cost of taking out a landlord insurance policy will vary depending on the age of the property, the nature of the tenants (for students, for example, it might cost a little more), and the amount of cover taken out.
What is the difference between Landlord Insurance and Home Insurance?
Landlord insurance covers specific risks with letting out residential property. A rental property will not be covered by a standard home insurance policy because it is not the owner’s home. The two main reasons for this are:
Firstly, rental property is essentially a business premise. Landlord insurance is designed for this principle.
Secondly, as a home-owner are at their property most of the time, so they can easily spot and resolve issues as they arise. Landlords must rely on their tenants notifying them of problems, and tenants are likely to be less concerned about the upkeep of the property.
As north London property specialists, we can advise landlords on all aspects of buy-to-let investments, including insurance. For more information on renting out your buy-to-let property contact M&M Property today.