Letting property in north London continues to be a lucrative investment. But there are risks involved in letting property which is where landlord insurance comes in. Insurance is 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 related to their buy-to-let property and rental activity.

What does landlord insurance cover?

Most landlord insurance policies include building and contents insurance, plus liability insurance. Landlords can choose to add other types of cover such as loss of rent, rent guarantee, accidental/malicious damage or home emergency, depending on their needs.

Below are some of the covers landlords can add to their insurance:

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 kitchen and bathroom furniture and flooring. If you own a leasehold flat, the freeholder might insure the building. In this case, the insurance policy should specify the aspects of the building for which the property owner is responsible.

Building cover for landlords

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.

Landlord liability insurance

Liability insurance protects landlords from compensation claims 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 and legal fees.

Accidental damage and malicious damage

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.

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.

Home emergency

Landlord home emergency cover is an optional extra on many landlord home insurance policies. Home emergency cover provides 24-hour assistance to deal with emergencies with the properties plumbing and heating, security of doors and windows, roof problems and drain and sewer blockages. Some policies cover the cost of providing alternative overnight accommodation for tenants if the emergency makes the property unsafe to live in.

Landlord home emergency insurance

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.

Unoccupied property

A vacant property can be more at risk of vandalism or burglary. If a property is unoccupied for more than 30 consecutive days, ordinary landlord insurance can become invalid. Unoccupied property insurance will cover the building and contents for extended periods when there is no tenant.

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 that would be costly to replace.

It is up to the individual landlord to decide whether liability insurance is necessary. It is included as standard in many 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 property’s age, 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 standard home insurance policy will not cover a rental property because it is not the owners home. The two main reasons for this are:

  1. Rental property is essentially a business premise. Landlord insurance is designed for this principle.
  2. As homeowners are at their property most of the time, 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.