Using real estate as an investment is growing in popularity across the UK as homeowners are seeking to put their homes to financial use. Some are owners of a single property letting it out for some extra money, while others are investing in multiple properties. Regardless of the number of properties you are talking about, a landlord should NEVER let out a property without the appropriate insurance.
Landlord insurance is not a legal requirement but it's foolish not to have it in place. Even owners of single properties have invested tens of thousands of pounds in their homes; that's money they can ill afford to lose should a house be destroyed by fire or severely damaged by tenants. It goes without saying that landlord insurance is a must.
Choosing the Right Type of Insurance
Choosing the right kind of landlord insurance starts by determining where you are and where you are going with your properties. To get started, let's talk about the three main types of insurance landlords most often purchase.
- Landlord House Insurance - This type of insurance is intended for owners of single properties who plan to let their houses either on a temporary basis or permanently while they downsize to something smaller. It is similar to a traditional home policy except that it provides the extra cover necessary when dealing with tenants. Normally it covers both the building and contents of a single home.
- Landlord Buildings Insurance - Real estate owners letting out multiple properties are more likely to purchase landlord buildings insurance. This covers houses, the land those houses sit on, and any garages there might be. Sometimes a standard policy will also include outbuildings; other times those extra structures require some amount of additional cover.
- Landlord Contents Insurance - In order to cover the cost of replacing any contents included with the lease, such as furniture, landlords will take out a contents policy. Keep in mind this type of insurance does not generally cover things like boiler repairs. You can purchase separate boiler cover or other insurance as needed.
Property owners with multiple houses for rent really have no choice insofar as which type of policy they purchase. They will need a more expensive landlord buildings option since they are viewed as business owners whose product includes real estate rentals. Individual homeowners are different story.
If an individual homeowner is going to let their property on a temporary basis, say during the winter months while they are overseas, their current home policy may provide sufficient cover during that term. Obviously, they would have to check with the insurance company to make sure that this is not the case.
The other possibility is that their current home insurance company will not offer any protection, forcing them to purchase landlord house insurance. Property owners who plan to let their houses on a permanent basis will need this extra form of cover as well.
Don't Neglect Insurance Company Notification
For the real estate professional, the idea of buildings and contents insurance is a necessary and normal part of their businesses. They don't even think twice about purchasing cover. It is usually the individual homeowners that sometimes try to get away without purchasing the proper cover. This is not a wise idea.
If you were to decide to let your house to a handful of university students in order to make some extra money during the school year, you would be required to report that your insurance company. A failure to report your rental arrangement would most likely result in your insurance company denying a claim resulting from the actions of your tenants. In some cases, you might even be prosecuted for insurance fraud if circumstances warrant it.
Is that really worth the risk?
Landlord home insurance may cost you a little more than your standard policy but you can add on the added expense in the price of the rent. Renters won't be bothered; most of them know they are paying most of their landlord's expenses anyway.
What Buildings Insurance Covers
Buildings cover is designed to mitigate losses to the physical property and its structures. The losses in question can be caused by weather events, fire, vandalism, or even tenant negligence. Buildings insurance pays to repair or rebuild after damage to the property.
The important thing about buildings cover is to make sure you give your insurance company a proper assessment and value of your property. They are quite likely do their own valuation so you will have to meet somewhere in the middle. In either case, you want the total value of your cover to be enough to rebuild a house from scratch if it becomes necessary.
What Content Insurance Covers
Contents insurance for a landlord is somewhat tricky. Right from the start, we must recognize that the landlord contents insurance does not cover personal property owned by tenant. If renters want their content covered, they will need to get a dedicated renters insurance policy.
That said, any type of interior or exterior contents that the landlord supplies to the tenant would be covered under this type of insurance. For example, if the landlord provided furniture, garden tools, and non-permanent appliances, they would all be covered under any number of conditions. Contents insurance does not cover things considered part of a home's infrastructure; things like heating systems and plumbing.
Additional Insurance Considerations
As a landlord, you have made a tremendous investment in your property. However, your responsibility goes well beyond just the physical structures and parcels of land you own. There is also the matter of personal liability. To that end, a landlord should also consider:
- Public Liability Insurance - A public liability policy is no different for a landlord than it is for any other business owner. This insurance is designed to cover you in case visitors to your property are injured or suffer damage to their own personal belongings while on your premises. In an increasingly litigious society, public liability insurance is something landlords really need.
- Legal Expenses Cover - When a landlord is required to take a tenant to court, the expenses incurred through litigation can sometimes be costly. Moreover, in cases when a tenant does not have the financial resources to pay the rent then they most certainly will not have the resources to cover the landlord's legal costs. Legal expenses cover pays for things like solicitor fees and court expenses.
- Rent Guarantee Cover - It would be unthinkable for a landlord not to have rent guarantee coverage given the risky nature of letting out properties. Tenants default on rent payments all the time; there is no reason for you to put yourself or your personal finances at risk. Rent guarantee coverage is fairly inexpensive and can be attached to your main insurance policy.
Emergency Cover for Non-Local Landlords
When a tenant calls their landlord due to some sort of mechanical breakdown, it's expected that the building owner will respond within a reasonable amount time, especially when the breakdown in question constitutes an emergency situation. For landlords who do not live locally, this could be a real problem in terms of paying for repairs.
Emergency cover is a type of insurance that provides payment for immediate response in the event a breakdown or other type of emergency. One good example would be an inoperable boiler in the middle of winter.
A landlord with emergency cover could dispatch his or her heating contractor to a property in the middle of the night and not have to worry about the exorbitant fee that contractor will charge. Their emergency cover will pay the fee up to a prescribed limit. This type of insurance helps non-local landlords take better care of their properties so they do not become absentee landlords.
A good rule of thumb for non-local landlords is to contract with one or two individuals who are capable of maintaining all of the properties within a landlord's local portfolio. This makes handling emergencies a lot more efficient and cost-effective. Having regular maintenance also reduces the likelihood of emergency breakdowns.
Landlord insurance is not just an extra option for real estate owners; it is one of the best ways to protect property that will be rented to strangers. Whether you own a single property or an entire portfolio, you should never let out without proper insurance coverage. Otherwise, you are putting your property at risk and, by default your own financial future.
When you are ready to start looking for landlord insurance, be sure to concentrate first on companies with names and reputations you know you can trust. If you're unsure, do not hesitate to enlist the help of an insurance specialist or a financial manager. You don't want to put yourself in a position where you’re facing heavy financial losses and not enough insurance to cover it.
Purchasing landlord insurance direct from insurance companies or their brokers is one option. The following links will take you to the websites of some well-known companies, where you will find comprehensive information and options for quoting and buying policies.
Endsleigh - Endsleigh can insure your property online in minutes. On this site, you can ask for quotes, retrieve previous quotes, and purchase policies. You can also run background checks on potential tenants.
Discount Landlord - An online insurance broker offering landlord insurance through companies like Lloyd's and Zurich. You can quote and buy online or request a call back from an agent.
Just Landlords - A landlord insurance specialist that's been in the business since 1998. They offer traditional insurance packages as well as things like unoccupied cover and overseas cover.
Simply Business - This site belongs to one of the more well-known UK insurance companies providing business insurance. Their selection of landlord products range from basic buildings cover to cover for acts of terrorism.
HomeLet - An independent insurance provider specialising in the residential real estate market. All of their buildings and contents cover comes with free emergency assistance. They offer tenant-referencing services as well.
RentGuard Insurance - This company is a specialist company offering many different types of insurance products for the letting industry. Their range of products includes options for both residential and commercial real estate owners including tenant referencing and holiday home insurance.
You can make the quote process quicker and more efficient by using a comparison website. Comparison sites like the ones listed here let you get multiple quotes by filling out just one simple form. Most of the sites work with dozens of different providers to get you the best quotes possible.
Go Compare - Get your quotes here on landlord insurance from companies like AXA and UK General. When you purchase online, you'll have a chance to win free home insurance as well.
Confused.com -Offering competitive quotes on different types of landlord insurance including buildings, content, and legal expenses. AXA, Covea, and Ageas are just a few names associated with this site.
Compare the Market - Use this site to get multiple quotes from well-known insurance companies across the UK. You can get an immediate cover with online documentation and several different payment options.
Money.co.uk - This site offers price comparisons on 98 different landlord insurance products. Products include buildings, content, and boiler cover.
UKinsurancenet.com - This site only compares insurance policies, but you get quotes from up to 20 different providers. There are options for those with limited properties as well as those with large portfolios. You could save as much as 50% here.
Quoteline Direct - This is a comparison website dealing only with insurance products. When you purchase landlord insurance here, they guarantee a minimum savings of 10% over the competition.