Landlord Insurance: What Does It Cover & Why Do You Need It?
Making the decision to rent out your property is no mean feat. You not only have to make sure your property is up to code, you need to make sure that no personal valuables are stored in the property, and you have to make sure you have the right insurance cover for your property in case anything goes wrong.
Although exploring insurance can be overwhelming and you may be tempted to negate it, it is vital you as a landlord have insurance before renting out your property to tenants. Here we break down what landlord insurance is, what it covers, and why you need it.
Landlord insurance is specialist cover for your rental property with different policies offering various cover options, as well as different levels of cover. A basic policy should cover things like contents, damage, and loss of rent, as well as any claims made against you should someone be injured in your property.
Although there’s no legal requirement for you to have landlord insurance, a normal home insurance policy won’t cover you if you a renting your property to tenants. You may also find that the mortgage you have on the property you are renting requires you to have valid landlord insurance before you are able to rent it out.
This may also mean you need to have written permission from your mortgage lender before you let your property – so it’s important to make sure, otherwise you might be breaking the terms of your mortgage.
Landlord Insurance not only gives you peace of mind that your property is protected, but it also protects it when it is vacant between lets. Even if you are letting an unfurnished property, contents cover should include things like curtains, carpets, white goods and other kitchen appliances – so it’s important you have this cover.
Landlord buildings insurance typically offers buildings cover up to a certain amount (the sum insured) to insure the structure of the building, plus any fixtures and fittings, should they be damaged in a fire, flood or storm or an accident.
It’s important to check the details of the policy you choose, but in general these are the types of things a landlord insurance policy would cover as standard.
If you are letting a furnished property you need contents cover to make sure you are able to repair or replace any damaged furnishings in your property. A majority of landlord insurance policies will include contents insurance; however, you should check each policy as it might need to be chosen as additional cover. As mentioned, even if your renting out a property that is unfurnished, you should get contents cover as this should include white goods, curtains, carpets etc.
This covers you against any intentional damage to the building and/or its contents. For example, if the walls are defaced, any windows are purposefully smashed or any of your contents are stolen. A usual requirement to claim malicious damage is a criminal case number, so if you believe your property has been damaged in this way you should report it to the police.
This lets you claim if the property becomes uninhabitable after damage from a fire or a flood. In extreme circumstances, your tenants may have to move during any repair work, which means you wouldn’t receive your rental income to pay your mortgage. This cover will pay out so you can pay your mortgage. However, it’s important to make sure you check the maximum loss of rent pay out in order to confirm your monthly mortgage costs would still be covered.
If a tenant is injured due to a fault in the property (e.g. bad wiring, loose floorboards, unsafe windows) or their personal property is damaged or stolen while living in your property, they could sue you for damages. Damage claims such as these can not only be time consuming, they can become extremely expensive, so most landlord insurance policies offer liability cover up to £2 million – just in case you are taken to court.
If you are letting your property out as a student let, you will find there is a cyclical turnover of renters. Meaning your property is often vacant for a certain period of time in between renters. This cover is for rental properties that are left unoccupied for up to 90 to 120 days – the latter if you are solely renting to students.
There are further covers that landlord insurance providers offer that are optional. Things like rent guarantee can help cover unpaid rent up to a certain amount or key care insurance – if your tenant lose or break their keys, your insurance can cover any costs for a locksmith or replacement of locks or keys. It’s important to read thoroughly what the insurance provider is offering and tailor your policy accordingly.
The amount of information can be overwhelming, but don’t despair! Property management companies like us are here to help and answer any of your questions. You can also go online and use websites like Compare the Market or Money Supermarket to review providers and policies and find one that’s right for you.
To read more about your responsibilities as a landlord, visit: https://www.mygov.scot/renting-your-property-out/your-responsibilities/