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Nethouseprices Guide to Landlord Insurance

Landlords have so many expenses these days that we completely understand the temptation to make economies wherever possible. One area where you shouldn't scrimp too much, though, is insurance. Landlord insurance can protect your property and your profits against all sorts of adverse events. In this guide, Nethouseprices sets out the basic nature of landlord insurance.

1. What is landlord insurance?

The most important thing to note is that there isn't really a single definition for a landlord insurance product. Rather, cover will vary among providers and according to an individual landlord's specific requirements.

2. Am I obliged to take out landlord insurance?

There is no statutory obligation to take out landlord insurance. If you financed the purchase of your rental property with a mortgage, though, your lender will typically insist that you buy a policy that will protect the value of the premises, in the event that it sustains damage. Even if you bought the house or flat on a cash basis, you should still take out cover to protect what, given house prices in the UK, is a hugely valuable asset. Standard homeowners' insurance is not really adequate, because it won't cover situations where, for example, you lose out on rents.

3. What sort of cover is available?

An insurance provider will put together a package of policies to accommodate your needs. You should consider the following types of cover:

A) Landlord building insurance

This will cover the cost of repairing or even rebuilding your property should certain disasters (such as, but not limited to, storms, fire, earthquakes, subsidence or malicious damage) befall it. This type of insurance is often unlimited these days, but you might be asked for an estimate of how much it would cost to rebuild the property. This information will be used to help determine the premium you will be asked to pay. The cost of reconstructing a home will seldom be the same as the price you paid for it or, indeed, the latest house valuation. A useful online tool for calculating the cost of rebuilding your property can be found at

B) Landlord contents insurance

Contents insurance will usually cover the replacement value of your household belongings in the event that they are lost, through burglary for example, or accidentally damaged. The amount of coverage you require will, of course, depend on whether the property is furnished or unfurnished. If you are renting out a furnished house, you will want cover for furniture, soft furnishings, appliances, kitchenware and decorations like pictures and ornaments. Even if the premises you are letting are unfurnished, you will usually want cover for carpets and any appliances that you might provide for the use of your tenants, such as the oven, dishwasher or washing machine, for example.

The cost of contents insurance varies according to several factors. The most obvious issue is location. In other words, is there a high crime rate in your postcode? An insurer will also take into account the type of tenant you envisage occupying your rental property. Older couples and professional people will usually attract lower premiums than young people and students. When agreeing the policy document, do check that it covers accidental (as opposed to malicious or negligent) damage. There are occasional policies where this type of damage, either to the building or its contents, is not covered.

As a landlord, you are not required to insure your tenants' possessions. This is entirely their own responsibility.

C) Landlord rent insurance

There are two types of rent insurance:

i) Rent guarantee insurance, which will cover landlords for lost income should tenants default on their rent payments.
ii)Loss of rent insurance, which will compensate landlords for rental income lost if tenants have to leave the premises while repairs, for instance, are being carried out.

There are two crucial points to be made here. Firstly, there will usually be a strict cap on how much you will be paid if tenants default, so you won't be covered indefinitely. You will normally have to demonstrate that you took reasonable steps to ensure that your tenants were financially responsible. Secondly, loss of rent cover is quite often provided as part of your buildings insurance, but this is by no means universal, so do check out the wording of your policy.

D) Landlord legal insurance

There are three branches of legal insurance for landlords:

i) Landlord liability insurance, which will cover you for death or injury occurring on your property as well as for any resulting litigation. In certain circumstances, a landlord might be obliged to take out this type of insurance. An excellent example is where you are letting your property to undergraduates. The university or college might well set out a minimum level of cover that you must obtain.
ii) Legal expenses insurance, which will help you pay for professional services and costs should you need to take action, such as issuing an eviction notice, against tenants.
iii) Employers' liability insurance, which will provide cover for injury or death caused to cleaners, gardeners or maintenance workers hired to tend to your property.

E) Landlord emergency insurance

Emergency cover will help you to quickly arrange repairs to plumbing or your boiler, for instance. Depending on the type of cover you need, your policy might pay for your tenants to stay in alternative accommodation, if any repairs necessitate their leaving your property.

F) Unoccupied premises cover

Various things can invalidate an insurance policy. You must, by way of example, notify your insurer each time you change tenants, and a property which is empty for more than thirty days will normally be considered unoccupied and the insurance will lapse. This seems rather draconian, but damage can be sustained in empty properties - vandalism or storm damage, for instance. If you anticipate your property being unoccupied for a significant period of time, you should consider taking out unoccupied premises cover.

Final notes

Do compare packages offered by different insurance providers, because there is intense competition for your business. Many insurers will offer you such sweeteners as giving you a discount on your contents insurance if you take out their buildings cover. It's increasingly common for landlords to be offered a deal when they insure multiple rental properties. Shop around to make sure you are getting the best possible deal.

Visit the new Landlord Advice section here on Nethouseprices which is packed with helpful information

Source: Nethouseprices

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