You may already be thinking about becoming a landlord or already own a rental property or may have a portfolio of Buy-to-Let properties. Do you need Landlord Insurance and is it different to Home Insurance?
What is Landlord Insurance?
This is an insurance policy designed to cover a landlord from financial losses connected with the ownership of a rental property. Typically, the policy covers the building however, many insurers offer the option to cover the contents inside belonging to the landlord. Tenants of course need to make separate provision to insure their own contents.
A Landlord Insurance policy generally covers perils such as fire, storm damage & lightning, theft, malicious damage, explosion, subsidence, escape of water/oil and public liability. There are a variety of insurers who offer Landlord Insurance and so, each may offer policies that may include all or some of these perils. Always check the cover provided and seek advice to help determine the best cover for your property. For an extra amount of premium, some policies can be extended to include optional covers such as accidental damage, legal protection, malicious damage caused by the tenant or alternative accommodation for the tenant in the event the house becomes uninhabitable in the event of an insured event. For additional peace of mind, landlords can purchase Rent Guarantee Insurance providing rental income and legal expenses should a tenant stop paying their rent.
What is the Difference Between Landlord Insurance and Home Insurance?
Owning a Buy-to-Let property is very much like a business. You allow somebody (the tenant) to live inside your property and in return, your tenant pays you rent. It stands to reason that the insurance policy you buy will contain commercial elements that complement the business relationship between you and your tenant.
Here are a few differences between the two types of insurance:
- Alternative Accommodation – Home insurance will offer alternative insurance for you and your family living with you in the event of a claim where the house is uninhabitable. A Landlord Insurance policy offers alternative accommodation for your tenants living in your Buy-to-Let property.
- Loss of Rent – Should your rental property become uninhabitable in the event of a claim EG. a serious fire, you would expect the Landlord Insurance policy to offer you financial support. This is a unique feature that would not be found in a Home Insurance policy.
- Public Liability – Any injury or property damage caused by your negligence can be very expensive especially if somebody sustains a severe and life altering injury or even a fatality. Home Insurance is not designed to cover for such instances arising from a business activity. Remember, a Buy-to-Let policy is seen to be a business venture which would not be covered under a domestic Home Insurance policy.
- Legal Expenses – Most Home Insurance policies will cover legal expenses that you incur on a domestic level such as a dispute with a neighbour about repairs to a fence or taking action against a tradesperson for faulty workmanship but these policies are not designed to include business related expenses such as taking a tenant to Court to recover unpaid rent.
- Malicious Damage – Home Insurance normally covers your home if it is damaged by an act of vandalism however, a Landlord Insurance policy will cover the wilful act of damage caused by a tenant.
Do you Need Landlord Insurance?
No matter whether you have an inner city apartment, home in the suburbs or even a country home that you are renting to tenants, it seems likely that you may need Landlord Insurance to protect you against financial losses for some or all of the types of perils outlined today. In some instances, your Buy-to-Let mortgage provider may insist you take out a Landlord Insurance policy to cover the building. One thing is for sure, having no cover could be a costly expense that most of us would want to avoid and for a small investment each year, you will receive the peace of mind knowing that your rental investment is well protected.
How do I Buy Landlord Insurance?
Obtaining Landlord Insurance is a relatively easy thing to do, Call Nicholas Humphreys (Sheffield – Broomhill & Crookes) and let us introduce you to our trusted friends at Let Alliance who specialise in Landlord Insurance.
Whether your rental property is in Sheffield or anywhere else in the UK, we are able to introduce you to our friends at Let Alliance. Call us on 0114 47 4715 or e-mail sheffieldwest@nicholashumphreys.com Our office is open 7 days a week from 8am to 8pm.
