Tag: landlord cover

TLA Landlord Insurance Guide (2)

Landlord insurance is not compulsory – think of it as bulked-up home insurance to cover extra perils such as non-payment of rent or damage by tenants – but it can be very costly to go without it if disaster strikes. Our tips help you decide if it’s right for you.

It isn’t a legal requirement but without it you may not be covered if you have tenants

If you’re going to be a landlord, you won’t be breaking the law if you don’t take out specialist insurance. However, if you rent out a property to any kind of tenant and want to be protected in case anything goes wrong, standard home buildings and contents insurance usually won’t cover you – you’ll need a landlord policy instead.

This is because insurers view the risk of renters living in your property – and the chances of them making a claim on an insurance policy – very differently to you, the owner, living in it instead. Two young students who enjoy socialising renting a flat, for example, pose a greater claims risk to an insurer than an older professional couple who own their property.

Also, there may be some cases where a buildings policy is not necessary. For example, if you own a leasehold property in a block of flats and rent it out, you could find the block freeholder has their own buildings insurance which should cover you in the event of any incident such as a leaking washing machine ruining your floor – and the flat below’s ceiling.

Yet not all freeholders will have a comprehensive buildings insurance policy so if you’re in this situation, double-check.

Landlord insurance is ‘bulked-up’ home insurance, covering all the usual, plus tenant issues

Landlord insurance is usually an umbrella term given to different strands of cover bolted together for anyone who owns a home they rent out, and it’s entirely up to you to decide what it includes, though the more you add the more it costs. These are your options:

  1. Buildings cover. To rebuild or repair your home if the structure is damaged.
  2. Cover for YOUR contents. If stolen by someone other than your tenant (see below as there’s separate cover for this) or damaged by fire, flood and more. It will NOT pay out for a tenant’s contents.
  3. Loss of rent. If tenants don’t pay up or are rehoused if your home’s damaged.
  4. Accidental/malicious damage or theft by tenants. If your goods or furnishings are stolen or damaged by tenants.
  5. Legal expenses. If you take action when dealing with tenant disputes.
  6. Public liability. If a tenant or visitor is injured on your property and claims against you.
  7. Property damage due to illegal cultivation of drugs. By your tenant, of course
  8. Eviction of squatters. Where a tenant simply won’t leave.

There are other considerations too: (All of these guides will be available shortly)

  1. TLA Landlord Insurance GUIDE (1)
  2. Membership of a Landlord Association is no Replacement for Cover (GUIDE)
  3. Contents Insurance – Furnished Property Insurance (GUIDE)
  4. Leasehold Flats – All You Need to Know About Buildings Insurance
  5. Buildings Insurance and Mortgage Applications – You Will Need Both When Re/Mortgaging (GUIDE)
  6. Renting Out Your Main Home Insurance (GUIDE)
  7. Making to Make a Claim on Your Landlord Insurance (GUIDE)

Insurers will ask what your tenants do (and may charge more if they’re students or on housing benefit)

When you buy landlord insurance, you’ll be asked what kind of tenant you rent to – usually early on in the application process.

You’ll generally be asked to choose from a dropdown box or to tick a box showing what type of tenant you have. These are the main categories you can choose from:

  1. Employees
  2. Students
  3. Those in receipt of housing benefits
  4. Unemployed
  5. Self-employed
  6. Asylum seekers
  7. Retired
  8. A mix of the above

It matters because the type of tenant you rent your property out to will have an impact on how much you pay for landlord insurance. Choose to let to students or those in receipt of housing benefit (and the unemployed) and you’ll pay more.

This is because these groups’ lack of income – or low level of take-home pay – means they’re a higher risk to insurers, which worry you’ll struggle to fill your rental property. In particular, you’ll pay a much steeper premium if you want your policy to cover you for non-payment of rent.

Not every insurer is willing to cover all types of tenant but most will give you a broad choice of tenant categories. However, you must always make it clear to an insurer who it is you’ll be renting to. Fail to do so and you could invalidate your policy.

You’ll need extra cover if the property is left vacant for more than 30 days

You’ll need extra cover if the property is left vacant for more than 30 days

Most policies will cover you for a claim if your property’s left empty for a short period, usually 30 days – handy if you’re planning a quick renovation or kitchen overhaul. So if thieves broke in or your property suffered damage from a water leak, you’d get a payout.

But if you know the property is going to be sitting empty for several months – for major works, say – you’ll need to tell your insurer and agree additional cover, or pay extra to take out a separate ‘unoccupied property insurance’ policy to add to your existing landlord cover.

If you don’t, you could find yourself uninsured and out of pocket during that period if the property is taken over by squatters, vandalised or damaged by fire or flood.

You MUST provide smoke and carbon monoxide alarms – if not, you may invalidate your policy

These alarms should be on every floor of the property you’re letting and you’ll need to test them frequently. You also need to make sure the property is safe for tenants – eg, having up-to-date building and electrical installation safety regulation certificates – and carry out any necessary repairs.
Plus, you’ll need to have all gas and electrical equipment checked regularly and ensure it meets safety requirements. Fail to do so and insurers can deem your policy invalid. Your tenants can then take you to court and you won’t be able to use legal cover to fund the claim.