insurance
Landlord insurance explained
Renting out a property involves various safety and security risks, so a flexible insurance policy is vital. Simply Business examines the options.
“When your property is rented out, a normal home insurance policy won’t usually cut it”
A
comprehensive landlord insurance policy can offer peace of mind and help landlords to protect their assets, while ensuring compliance with the requirements of your mortgage lender and
any lease that’s in place. When your property is rented out, a normal home insurance policy won’t usually be sufficient to cover damage caused during the tenancy. This is because most residential home insurance policies are valid for owner- occupiers only, so landlords need a dedicated landlord insurance to keep their assets protected. A landlord insurance policy can cover the building and any contents you
provide for your tenants, provide financial protection if your tenants fail to pay their rent, or help you pay rental-related legal costs. Outlined below are some of the key types of landlord insurance, along with some useful tips for choosing your policy.
Landlord buildings insurance
Similarly to a home insurance policy, a dedicated landlord insurance will usually include buildings cover, which can pay to repair or rebuild your rental property if it’s damaged by fire, flood or vandalism. If choosing a buildings insurance, you’ll need to calculate the “rebuild
value” of your property – this is the total cost of rebuilding it from the ground up, including labour and materials. The rebuild value will represent your cover limit, which is the maximum amount an insurer will pay out in the event of a claim. It is important to estimate this figure as accurately as possible, because if you’re underinsured, your insurer can reduce any claim in proportion to your shortfall in cover.
Landlord contents insurance
If you opt for a landlord contents insurance, you’ll be covering any items in your rental property that belong to you, for example any furniture and white goods that you provide for your tenants. This insurance can pay to replace or repair your items if they’re stolen or damaged, but it won’t cover your tenants’ belongings – if they require further protection, it would be up to them to take out their own contents insurance.
Property owners’ liability insurance
If someone suffered an injury or their possessions were damaged in your house and they took you to court, the legal fees and compensation payment could be costly. For example, if a tenant tripped on a broken floor
www.housingmmonline.co.uk | HMM January 2017 | 29
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