Being a busy landlord, you’ll want to ensure you have the most cost-effective and appropriate cover for you. Here are some landlord insurance FAQs to get you started.
Do I have to have insurance to be a landlord?
There is no legal obligation to arrange landlord insurance before you let a property to tenants.
Given the size of the investment you are likely to have made in the purchase of the property and the liabilities faced by your buy to let business, however, you might consider landlord insurance to prove a more than prudent safeguard.
The need for landlord insurance becomes especially important in two further situations:
- if you arranged a buy to let mortgage to buy the property, the lender is almost certain to have made it a condition that you maintain adequate building insurance at all times – sufficient to protect the outstanding mortgage loan you owe; and
- if you employ anyone else in the running of your buy to let business, the law says that you must have at least £5 million employers’ liability insurance – cover which may be arranged entirely separately but may also be incorporated within your landlord insurance provisions.
How is the building covered?
Landlord insurance typically provides cover against threats of loss or damage to the building itself from such events as an escape of water, flooding, fire, impacts, storm damage, vandalism and theft.
The total building sum insured needs to be sufficient for clearing the site and rebuilding the entire property in the aftermath of a major disaster resulting in its total loss.
Can I cover the contents I own?
Landlords typically own at least some of the contents of any let property – if only the furnishings in common areas such as hallways and staircases.
Landlords contents insurance may be incorporated into your landlord insurance policy in the amount you consider sufficient to replace lost or damaged items you own – your tenants are responsible for insuring their own possessions.
What if I lose rent when the property cannot be let?
If your let property is so severly damaged following a major insured event that it becomes temporarily uninhabitable, your landlord insurance may provide compensation for loss of rental income.
There is likely to be a time limit during which compensation is paid, and the amount is typically limited to a prescribed maximum – often calculated with reference to the total building sum insured.
Can I get indemnity for my liabilities as a landlord?
A landlord’s responsibilities, obligations and liabilities are many and varied.
Ensuring the health and safety of your tenants is, in many instances, prescribed by specific legislation, but you also have a general duty of care to prevent tenants, their visitors, your neighbours or members of the public from suffering injuries or having their property damaged through any negligence in your role as a landlord.
If any such accident occurs and you are held liable, you may be ordered to pay substantial compensation – especially if any injuries are involved.
For that reason, landlord insurance typically incorporates landlord liability indemnity of at least £1 million – and often, depending on the size and type of let property concerned, considerably more than this (up to £5m with some landlord insurance specialists).
Landlord insurance, therefore, may be the way for protecting the financial security and very future of your buy to let business.