Insurance for Uk Landlords
Introduction to Landlord Insurance – landlord insurance is a type of building insurance product that is designed to protect the owners of property that has been purchased to rent to tenants. In the main, cover is fairly similar to that provided by a standard home insurance policy, a wide range of perils are provided as well as liability insurance cover, although several of the covers are slight different to ensure that the landlord receives the correct form of protection based on the usage of the building. Often referred to as buy to let insurance, this type of property insurance policy is usually required to be in place at the date of contract exchange and before mortgage funds are released. Often the lender will also want to see a copy of the policy wording and to have their name listed on the schedule of landlord insurance. Your solicitor handling the purchase will be able to inform you of the exact requirements. Most landlord policies come with a number of basic covers.
Landlord Buildings Insurance – this section of the landlord insurance policy will cover the structure of the property as well as interior decorations and landlords fixtures and fittings. Included in the sum insured should also be: aerials, aerial fittings & masts, underground pipes and cables, garden walls, fences, paths, swimming pools etc, all provided for the use of the tenant. The property should be insured for the full reinstatement cost. Arriving at a correct sum insured may not be as problematic as you first think, if you have a mortgage on the property, then the lenders surveyor should have visited the premises and will mention a sum insured for insurance purposes in his report. If you are lucky enough not to have a mortgage, then there are a number of online guides that will assist you in calculating your own sums insured, making adequate allowances for all aspects of having to rebuild a property. Factors which can affect the price you pay for this type of insurance include; the location and the size of the property as well as the type of tenant you intend to let the property to.
Landlord Contents Insurance – this section of the property insurance policy is designed to protect the landlord’s contents. It’s important to make the tenant aware that their own personal belongings can not be insured under this section. Basically, the landlord does not have any insurable interest in the belongings of the tenant and thus they must make their own insurance arrangements. Often, with rental property, the amount of contents supplied by a landlord is on the low side and thus insurance is overlooked. However, many landlords mistakenly assume that carpets (because they are mainly left behind when a property is sold) are covered under the building insurance and find that following a loss they have no insurance. Carpets should be insured as contents as well as all other contents supplied for the use of the tenant. However, fully fitted kitchens and bathroom fixtures and fittings, because of their degree of annexation, should be insured as part of the building.
Landlord Liability Insurance – this is a very valuable section of the policy and will cover the landlords’ legal liability to members of the public (including the tenant) for sums they are legally required to pay in respect of negligence resulting in accident or injury. Different polices deal with cover in different ways; some will only give cover attaching to the ownership and supply of the contents if you have purchased the contents section of the landlord policy.
Loss of Rent/ Alternative Accommodation Insurance – this section of the policy should not be confused with Rent Guarantee cover which basically provides cover in respect of tenant default. Under this section a sum insured is provided that will pay out a percentage of the total sum insured (20% is fairly typical) in the event that the property cannot be tenanted following an insured peril occurring at the property.
Landlords Legal Expenses – this type of cover is often overlooked by landlords but it can provide valuable protection against a wide range of events that may need legal intervention to help resolve them. Cover will vary from policy to policy but typical covers may include: Property Damage, Nuisance & Trespass and Repossession of a property that has been let under an assured short hold tenancy agreement, Recovery of rent arrears, Defence against Prosecution cover. Alternative accommodation costs (if you cannot obtain possession of the property and you need to live in it) Rent Indemnity Cover. These are the core insurance covers that a landlord can purchase.