You might be a “professional” landlord who has made the conscious decision to invest in buy to let property as a serious business proposition. On the other hand, you might be an “accidental” landlord who has inherited property or decided to let a home already in your ownership almost as an afterthought.
In either event, there is one common misconception that you might want to take care to avoid. Any standard home building and contents insurance that may have been in place when the property was in owner occupation is no longer valid the moment the property is let to tenants.
Insurers take the view that property which is owned for essentially business purposes – let to tenants in pursuit of a rental income – is exposed to different risks and vulnerabilities than one which is occupied by its owner as their principal home.
The distinction is important because if you rely on standard home building and contents insurance which was arranged when the property was owner occupied, but it is subsequently let to tenants, the cover is likely to be regarded as invalid by your insurer. Any claim you make for loss or damage, therefore, is likely to be rejected.
Purpose designed landlord insurance is a specialist product in which we have taken a particular interest here at constructaquote.com. So, you might want to consult us about your insurance needs and requirements as a landlord.
Why choose us?
- Not only do we specialise in landlord insurance, but 95% of our customers consider the service we offer to be “good” or “excellent”
- We arrange insurance cover for private dwellings, flats and semi-commercial property
- We offer discounts for multi-property portfolios
- Our landlord insurance policies include £2 million property owners’ liability cover as standard
- Policy excesses may be as low as £100.
Do I need landlord insurance?
Firstly, if your let property is mortgaged, typically you will be legally obliged under your mortgage contract to have an adequate amount of buildings insurance cover in order to protect both your financial interest in the property.
That potential mandatory obligation aside, consider the risks you are prepared to take without appropriate cover. Given the serious perils of such things as fire, smoke damage, flooding, escape of water, impacts, vandalism and theft, the very structure and fabric of your let property may be at risk.
If you do not have landlord insurance, and the worst comes to the worst, you stand to lose the entire property and have no recourse to the funds necessary for its reconstruction. The provision of that safeguard is probably the single most important aspect of landlord insurance.
The total building sum insured, for instance, is typically calculated with reference to the cost of completely reconstructing the building if it has been damaged beyond repair as well as clearing the site.
The liability assumed by a property owner and landlord
Simply by assuming ownership of any kind of property you take on responsibilities for ensuring that it causes no harm or damage to your neighbours, visitors or other members of the public. It is said that you owe them a duty of care to ensure that they suffer no injury or damage to their own property.
If you are held to be in breach of that duty of care, you may be sued for damages by way of compensation.
If you are a landlord, you have still further duties of care towards your tenants and their visitors. Once again, if any one of them is injured or has their property damaged as a result of your negligence as a landlord, you may be sued for damages.
In either of these cases, the damages claimed may be substantial and it is common, therefore, for property owners’ liability insurance – and its related landlord liability insurance – to offer a minimum of £1 million indemnity. At constructaquote.com we go one step better than this by including £2 million liability cover as standard for property owners and landlords.
How much is landlord insurance?
As with any kind of insurance, the cost of landlord insurance depends on a whole host of factors – the greater the risks that are covered, the more expensive the premiums are likely to be.
In the case of let property, therefore, the principal factor is the value of the property itself, the cost of reconstruction in the event of a total loss and the value of any contents owned by the landlord.
A further consideration in the price of premiums may be the level of property owners’ liability insurance included – although it has already been mentioned that our own policies offer a generous £2 million of cover.
Landlords may also want to ensure that, in the event of an insured incident leaving the property temporarily unlettable, that insurance provides some degree of compensation for lost rental income. The maximum amount payable in these circumstances is commonly expressed as a percentage of the total building sum insured.
Additional factors likely to affect the cost of your landlord insurance might be the inclusion of accidental damage or “all risks” cover or the inclusion of provision for reimbursement of legal fees and expenses in the event of disputed liability claims or other issues involving your tenants.