Renting out flats can provide property investors with a significant stream of income (particularly as ongoing problems in the economy mean many people are struggling to buy their own home), but it’s vital such professionals ensure these buildings are properly insured. Indeed, there are many things that will need to be taken into consideration.
As obvious as it may sound, you can’t use a similar insurance product to cover a block of flats to that for your own personal residence. With such complexes featuring multiple apartments that will be occupied by separate leaseholders, you will need to take out a specialist policy that will cover the entire development, including communal spaces and outbuildings.
Take out wide-ranging cover
Before taking out any policy, it’s worth looking closely at the terms and conditions so you know exactly what you are – and what you are not – covered for. Although you might think that it ought to without saying, the importance of having wide-ranging cover for your block of flats really cannot be overstated. In taking out a policy, you should ensure you are not just covered for damage caused by things like fire, flood and theft within the flats themselves, but also in communal areas such as hallways, lobbies, gardens and lifts.
It’s also worth bearing in mind that you’ll be liable to pay for and repair damage caused by leaking water (if you own a block of flats you should be prepared for the possibility of a leak from one apartment in the complex coming into another). Ensuring you have a good standard of cover means you won’t have to meet the expense of such repairs out of your own pocket, while the cost of providing tenants with alternative accommodation as their homes are being repaired will be paid for.
Bear in mind that varying levels of cover are available, so you should always make sure that the policy you get is an accurate reflection of your property assets.
Protect yourself against tenant disputes
Even though renting out blocks of flats can see investors generate a significant income, it’s worth bearing in mind that problems can – and often do – arise with tenants where they will not pay their rent.
Whether they’ve not been able to pay because they have recently been made redundant or simply refuse to do because of a dispute, not receiving rental income could mean that you in turn struggle to meet your own monthly mortgage payments for the building.
However, making certain that rental guarantee cover is incorporated into your non-standard home insurance policy will ensure the cost of your rental income continues to be met. Such protection can also prove useful during periods when you have empty properties between tenancies.
In addition, you might want to look into getting legal expenses insurance. Doing so will help you to meet the legal costs attached to taking a tenant to court over a dispute, as well as provide cover for any rental income that you have lost.
Avoid taking out the first policy you see
In much the same way as with any insurance product, it’s important you get cover that not only provides a comprehensive amount of protection, but is also competitively priced. This means that you should avoid automatically signing up to the first policy you come across, as it’s quite likely that with a little more effort you can obtain the same standard of cover for less money.
Instead, you ought to spend time comparing offers from a variety of companies doing so enables you to establish what is a reasonable price for the level of protection you that desire. Utilising the services of a broker can help you to do this, as such companies are able to source policies from numerous specialist insurance providers and help to arrange cover that meets your specific requirements.
