Insurance

Insurance for Landlords

There are a number of reasons for ensuring that you do not use a standard household policy in place of a BUY to let insurance policy. The majority of the benefits available under a standard household policy are severely curtailed when the property is let and cover may cease altogether if you do not advise the insurer that the property is let.

The things to consider when looking at insurance to cover let property are:-

• Loss of rent cover- This is intended to provide you with cover should you be unable to let the property due to an insured loss. A reasonable policy would restrict the loss of rent cover to 20% of the buildings sum insured.



• Tenant type - Asylum seekers are probably the most difficult tenant type to find cover for followed closely by homes in multiple occupation. If there is not a direct tenancy agreement in place between the tenant and the landlord this again can severely curtail your choice of insurer. The tenant types insurers find most acceptable are Employed/Professional, Retired, Unemployed receiving housing benefits, Students. The majority of policies do not cater for short term holiday lets, should you be in this market then we would suggest a specialized holiday home insurance policy.



• Cost of providing alternative suitable accommodation - If your property is uninhabitable due to an insured loss, you as a landlord could be held responsible for providing your tenant alternative accommodation. This section of the policy is to cover the cost should the alternative accommodation prove to be more expensive than the rent you are charging.



• Unoccupied property insurance - This section of the policy deserves very careful scrutiny. Some policies reduce the cover on landlords insurance policies to FLEE cover (Fire, Lightning, Earthquake, Explosion) within 14 day of the property becoming unoccupied, others offer full cover for up to 90 day.



• Landlords content insurance - Landlords contents insurance comes in two types, Indemnity cover which should an item need replacing then it will pay out only the items current value or new for old cover, which regardless of the age of the item, will provide cover to replace the item as new. Landlord's contents insurance does not generally include contents liability cover. If a tenant is injured as a result of any of your contents and you do not have liability cover, then you could be liable to pay substantial damages.



• Landlords liability insurance - If your tenant or another visitor to the property injures themselves, and the fault is proven to relate to your buildings or contents, then you are liable. Landlords Liability Insurance protects you in this event.



• Landlords legal expense cover - Generally Legal expenses cover is intended to be used to provide cover to pursue rent arrears, evict tenants in breach of contract or occupants unlawfully occupying the property, and finally to recover dilapidation costs not covered by the bond.



• Rent guarantee insurance - This policy is generally an extension of the legal expenses policy and is designed to pay the rent should the tenant default. To qualify for rent guarantee insurance you must have referenced the tenant using a referencing agency, and often there are other criteria to meet.

Landlord's Contents Insurance

Landlords contents insurance can be less straight forward than it seems. Before selecting your landlords insurance we recommend you read the notes below.

Issues to Consider

Fixtures & Fittings: Kitchens, bathrooms, radiators, are generally covered under a buildings policy. Occasionally with some landlords insurance block policies these can be excluded.

Fitted Carpets: fitted carpets & laminate flooring are mostly covered under the buildings section. If the contents cover you require is limited to fitted carpets & white goods.

New for Old: The majority of landlord's contents insurance policies are restricted to indemnity cover (replacement cost of the item). If you require new for old cover ask the insurance company for an accidental damage option.

Insurance for Tenants

We strongly advice you to take out household insurance.

Many tenants mistakenly believe that their furniture, belongings and decoration are automatically insured against theft or damage from fire or burst pipes. This is not the case and unfortunately some people realise this only after damage has been done.

Tenants Contents Insurance

Tenants and landlords very often overlook this. Generally for the tenant who has paid the first months rent + a deposit + administration fees in order to move into the property, insurance is the last thing on their mind.

Although a conventional home contents policy will give a basic degree of cover, for most insured perils it is not specifically designed for tenants and there can be some major gaps in the cover you need. Often the minimum sum you can insure for will be far in excess of what the tenant needs, typically a minimum of £10,000 - £12,000.

Most specialist tenant policies will provide the tenant with cover starting from £2,500 upwards, and will usually cover accidental damage that you may cause to the landlords fixture, fittings, buildings and contents.

Should the tenant accidentally damage the carpet with a wine stain or hot iron or a work surface with a hot pan mark, these events will be covered. Usually the tenancy agreement will make the tenant legally liable for such damage, any damage found at the time of the check-out will be deducted from the deposit or security bond.

If the tenant has adequate insurance these events will be covered, thereby protecting your deposit.

Recent studies have shown that only 1 -20 tenants have any contents cover at all.

There are countless examples of tenants who have experienced a loss through, burglary, fire, flood or other insured peril, which has damaged their contents and have been horrified to discover the landlord has not insured their personal possessions. They have been left with the cost of replacing the items themselves.

Any items a tenant takes into the property it is their responsibility to insure. Most policies will give an option for basic cover which can usually be extended to cover high risk personal items which are taken outside the home, on holiday or Worldwide i.e. cameras, sports equipment, clothes, jewellery etc.

In certain high-risk inner city post codes there will usually be a requirement to have minimum-security locks on doors and accessible windows.