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So do I need landlord insurance?
Essentially anyone that rents property in the private sector could be called a residential landlord. This refers to landlords that live with their tenants as well as those that rent properties to the public, but live in their own house.
There are many risks for property owners that are involved in the renting game and that's why landlords insurance is important! Whilst landlord insurance is not actually a legal requirement, it could save you a lot of money in the long run. For example, you may not be worried about any damage to your tenants contents, but any damage caused to your buildings could result in very costly repairs, that you may or may not be able to afford. Also, with the current "sue-culture" spreading from the US to the UK, you may also be interested in property owner liability -- we will touch on this again later on.
I'm just renting out my spare room...
Even if you are just renting out a room in your own house to a tenant, it's unlikely that a standard home insurance policy will take into account the additional risk of taking on a lodger. In fact, if you are just about to or have just taken on the responsibility of becoming a landlord, you may want to register for a Property Licence. You will need an HMO property licence if you own a residential property which is occupied by three or more tenants (where at least one of these tenants is unrelated to the others) which share a kitchen, toilet or bathroom -- you will still need a licence if the house you live in matches this description. Some landlord insurance brokers will want to ensure you have this licence before setting up your buy to let insurance policy.
What kind of landlords insurance features should I look for?
If you rent out a property then you're most likely interested in landlord cover -- that's why you're here right! Here's some policy features to look out for:
Buildings cover will protect your property from damage caused accidentally or maliciously. Buildings insurance for landlords will only cover the structural aspect of the house, eg. walls, ceilings, roof etc. Generally, tenants will pay for their own contents insurance but if you have furnished parts of the property and want to protect certain pieces of furniture then discuss setting up your own contents insurance with your residential property broker. Generally, when looking at building insurance, you must keep in mind the repair and rebuild costs of the property.
Property Owners' Liability Insurance
When renting to tenants there is a possibility that they may injure themselves on or in your premises. Property owner's liability will cover any costs and damages awarded to a tenant (or even just a visitor to the house) should they be injured due to an event relating to the property. For example, if a stair collapses and a tenant has a fall resulting in injury or a passer by gets hit by a loose roof tile and needs hospital treatment you may be required to pay for their personal injure claims. Claims can also be made about damage to property, so if damp damages electrical goods owned by the tenant you may be liable.
Loss of Rent and Rent Guarantee
When you're a landlord you rely on rent being paid on time. Sadly, this is not always the case. In fact, when one of your properties is having a lot of work carried out on it, your tenants may need to move temporarily out and thus you won't be receiving any rent at all. Thankfully, some insurers offer policies that deal with this. Loss of rent cover can protect your finances should repair work result in some down-time in which the house needs to be emptied.
Some brokers may also offer rent guarantee cover. This will protect you from tenants that leave unexpectedly or are withholding money. Each broker will have different terms in their policy.
Alternative Accommodation Cover
Occasionally unfortunate events can damage the property you own, be it a fire or a natural disaster such as flooding. In a case like this you may need to pay for your tenants to be put up whilst they are unable to live in your property. Some brokers offer policies that will help deal with a situation like this -- just chat to your broker about what options are available for you.
Is there anything I can do to keep the costs down
As with many insurance types, landlords insurance will be much cheaper when you've built up a few years no claims bonus. Unfortunately, other than gaining experience, there's little you can do to cut the costs of your cover down as it is very dependent on area or property type. For example, a flat will present a different risk to a house. There are many property types that landlords may own, be it a detached house, a semi-detached bungalow, a terrace house or a self-contained flat. Area, as with all insurance cover, can have an impact on cost. A property in a high-crime area will most likely cost a lot more to cover than an area with a low crime-rate. The type of let can also make a different -- professional lets are often the most desirable and can be cheaper to cover -- student lets can often result in increased accidental damage claims and be more costly. However, properties occupied throughout the day are less likely to be at risk from theft.
Other factors that may affect cover cost include the following:
Is the house built to standard construction specifications? This will mean it is cheaper to repair and also will avoid the pitfalls of certain construction types (for example flat roofs can flood, thatched roods are typically more flamable etc). Listed or historical buildings are also more often costly to insure as repairs are more meticulous to carry out. Whichever property type you own, Quotiva will help you find a landlords insurance quote