In my opinion though you'll usually get better and cheaper cover by going to a specialist broker. See Our Landlords Resources pages for some useful links and deals we have set up with insurers.
PROPERTY INSURANCE COVER FOR LANDLORDS
Robert Graver of landlords insurance brokers Alan Boswell says, “The message for landlords is don’t just accept the mortgage lender’s policy. Shop around -and check what’s covered because there are often large variations.”
Specialist buy to let insurance policies often include a flexible amount of contents insurance cover to cater for the wide variation in level of furnishings provided by landlords. The fewer furnishings you have, the less insurance cover you’ll need to purchase and the lower your premium will be.
After all, if you are only providing a limited amount of furnishings why go to the expense of getting a separate standalone contents policy.
It’s worth being clear about what’s covered and what isn’t within a property let insurance policy.
The main insurance risks (or “perils” in insurers jargon) are fire, storm, riot and civil commotion, malicious damage, theft, burst pipes, escape of water, subsidence and loss of rent. All buildings policies should cover these risks.
BUY TO LET BUILDINGS INSURANCE
Most buildings insurance covers will also include an automatic reinstatement of loss following a claim and the cost of hiring an architect, surveyor or consulting engineer.
So what’s not covered?
Well, the most common “get out” is where there has been a “gradually operating cause”
For example, suppose you have a small crack in the rendering on the outside wall of your property. If a strong wind subsequently rips off the rendering, the insurer will reject this because they will argue you did not maintain the property properly.
Each insurer will operate a different policy on unoccupancy because a property that’s unoccupied for greater than say 4 weeks may render cover invalid.
Landlords with long unoccupancy periods should expect to pay a premium on top of the normal insurance rate and get someone to check in on the property from time to time.
LOSS OF RENT
Another standard feature in landlord buildings policies is loss of rent and costs arising from the need to re-house a tenant.
This is an essential cover and covers the costs of arranging and paying for a tenant to stay in alternative accommodation where a building, following an “insured incident” is unfit for occupation.
Landlords should also be aware that who is responsible for loss of injury sustained by a third party resulting from the occupation of a building is a bit of a grey area in law. However, you really should have this cover which will be a standard feature in the specialist landlords’ insurance policies.
Check you are covered for at least £2m per claim for legal liabilities to third parties for accidental injury or damage at an insured property. Insurance cover should cover for anyone carrying out work for you as well as any legal defence costs including criminal proceedings and cover for the costs of having to attend court as a witness.
OTHER INSURANCES FOR LANDLORDS
As specialist landlord insurers have mushroomed in recent years, so has the availability of other types of cover. Again, landlords need to understand what these are and what’s covered.
This is just a rough guide to a complex subject which if you get it wrong can cost you a lot of money.
For more advice on landlords insurance or rent guarantee insurance see our Blog Post on Landlords Insurance or contact me.
For great value landlords insurance products click on Ukinsurancenet. Don't forget to quote our reference code, LFOC to get the best rates from them.
ABOUT DAVID LAWRENSON AND LETTINGFOCUS
I’m David Lawrenson from property letting experts LettingFocus.com.
We work in a consultancy role with organisations helping them with their products for the private rented sector but we also offer unbiased advice for landlords too.
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