Insurance for landlords is relatively cheap – and property people with extensive portfolios can generally drive down the cost with some astute negotiation.
Buy to let insurance comes in three parts – protection for the building and protection for the contents and the safety of people at the property.
Having landlord building insurance in place is probably a condition of any buy to let mortgage against the property.
Contents insurance looks after damage to any furniture, fittings and other items provided for a tenant by the landlord.
Liability cover is generally bundled with contents cover and safeguards a landlord for claims from tenants or visitors to the property who might become ill or have an accident resulting from something at the property, like a fall or trip.
Landlord buildings insurance
Standard buildings cover pays out for claims for damage to the structure of the building.
This could include flood or fire damage inside, storm damage to the roof or chimney, subsidence or problems with the drains.
Points to check on a policy are:
- The excess – the excess is the amount the landlord pays on making the first claim under the annual policy. Most policies have a compulsory excess and a voluntary excess. By increasing the voluntary excess, the landlord reduces the insurers risk, so cuts the cost of cover
- Accidental damage cover – Some policies include this as an optional add-on. If you want this cover, check the policy wording to make sure accidental damage is included
- Home emergency cover – This covers plumbing, drains, gas and electrical emergencies. Note the cover is for emergencies. The tradesman will make the problem safe, but will not necessarily carry out the repairs – for instance a leak may be sealed to stop flooding, but you may still need a plumber to fix the problem.
- The rebuild or reinstatement value – This is not the value of your property but the cost of clearing your land and rebuilding your home. You may need to take the advice of a surveyor on this.
Buildings insurance for leasehold properties is the responsibility of the freeholder or owner and paid for through the service charge.
Landlord contents insurance
Landlord contents insurance covers items you own in case they are damaged or stolen.
Even an unfurnished property has several hundred pounds worth of goods inside – for example, carpets, curtains, lampshades, a fridge, washing machine and garden tools. For a furnished home, the inventory is much longer.
Points to check on the policy include:
- The excess – Buy to let contents insurance will have an excess in the same way as buildings insurance (See above)
- Sum assured – Tot up the value of the contents and make sure the sum assured on the policy covers the full amount. Do not pay for more cover than you need by setting the sum assured too high.
- New-for-old – Make sure the replacement value is new-for-old so a claim does not leave you out-of-pocket.
- Accidental damage – You may think you have this cover but many contents policies will only offer accidental damage cover as an add-on. Check your policy wording.
Landlord liability insurance
This is often sold bundled with other landlord insurances – but landlords do need the cover and must check to make sure liability is included in a policy.
Liability insurance covers personal injury claims from tenants or other people visiting the property.
Legally, a landlord without liability cover musts settle the cost of a claim from their own funds – which could mean remortgaging or selling their own home.