If you’re new to the buy-to-let sector, you might have already realised that there’s much to consider when it comes to becoming a landlord for the first time. One important issue to bear in mind is insurance – read our guide to get the lowdown on the cover you will need.
Buildings insurance
This is probably the most essential of the various policies available to landlords, especially as taking out this form of cover is usually a condition of getting a mortgage. A good buildings insurance policy will financially protect your investment in the event of flood or storm damage, escape of water, falling trees/branches, fire, and landslip or subsidence (unless, of course, your property is located in an area known to be at risk of land movement).
Many buildings insurers also offer extras such as emergency callouts and temporary accommodation for tenants if the property becomes uninhabitable. Just don’t forget to read all of the fine print carefully and compare policies from different providers (ideally through a broker) to ensure you get the best deal for your needs.
Contents insurance
If you’re going to let furnished properties to tenants, contents cover is important for financial protection for the furniture and other items you have bought for the house or flat. These policies will only cover things owned by the landlord for the use of the tenant in the rental property, such as sofas, bookcases, appliances and beds.
It’s crucial to ensure the policy you choose provides sufficient cover that reflects the cost of replacing these items. Put together a list of everything you have purchased for the property in question so you can see exactly how much protection you need before consulting your broker for a landlord insurance quote.
Public liability cover
This type of insurance provides protection in the event that an incident occurs in one of your properties that has a negative impact on the tenant. For example, a resident may bring a legal claim against you if they suffer an injury due to inadequately fitted flooring – in which case, your public liability policy should cover the cost of dealing with this.
Don’t dismiss public liability insurance out of hand; the expenses associated with a tenant claim can be huge, especially when you bear in mind the legal costs. If you have a large portfolio covering lots of properties and tenants, this type of cover should be near the top of your list.
Extras
Some landlord insurance plans include extras like cover for loss of rent insurance and accidental and/or malicious damage. The former pays out in the event that one or more of your properties becomes uninhabitable – perhaps due to a natural disaster or fire – and you end up losing rental income as a result, making this a suitable add-on for investors who rely on the revenue from their buy-to-let portfolios to cover their day-to-day living costs.
Accidental and malicious damage cover, meanwhile, offers financial protection in the event of unintended or intentional damage to the building, fixtures and fittings. Accidental damage could include spillages and dents, while the malicious form may arise as a result of bad behaviour from one of your tenants. Be sure to look for a policy with a decent level of cover for your properties’ contents.
