Landlord Insurance Guide
Are you thinking about becoming a landlord?
If you haven’t already done so, you really should be making enquiries now with respect to landlord property insurance.
In what follows, it’ll be assumed that you’re already very conversant in principle with the question “what is landlord property insurance” and why it’s absolutely necessary to protect your interests. This article therefore concentrates on some of the typical components of these policies that you should be thinking about evaluating:
- property cover. This is the bread and butter of any such cover but what’s included or excluded can vary surprisingly from one policy to another. Be clear on things like flood risk, subsidence and so on;
- Even if you’re thinking of letting unfurnished, don’t underestimate just how much value you might have invested in the contents around your property. Think about wear-and-tear provisions, damage or theft by tenants and all related issues;
- landlord liability cover. The law will be harsh in situations where tenants have been injured on your property as a result of what the law considers to be causes attributable to you. The sums awarded can be huge and it won’t matter whether or not you agree with the court’s assessment that it was your fault – you’ll have to pay anyway. Be sure you’re covered to a substantial level;
- employer’s liability insurance. This will only apply in situations where you employ people or use third parties for jobs where the law might consider them to be de-facto employees. An example of that second category would be someone working casually for you at times doing some cleaning. Be aware – the law might interpret them to be employees, even if they’re friends and family. If so, you may be legally obliged to have this type of cover in place;
- unoccupied property protection. Typically, if your property stands unoccupied for more than a specified period of time (often around 30 consecutive days) then your existing policy or policies may become invalid. In such situations, you’ll require what’s called unoccupied property insurance. Often sold as a separate policy, it might be required in cases such as where your property is under refurbishment, your tenants are away on extended holiday or you’re between tenancies. Don’t get caught out by this one!
It’s worth quickly demolishing a few ancient but remarkably persistent myths in this area:
- you cannot ‘make do’ with owner-occupier cover or use it because it might typically be slightly more cost-attractive. It’s simply not valid for your situation;
- if you make a claim and have the wrong policy in place, yes, the insurance provider will discover it and your claim will most likely be rejected;
- you also have legal liabilities towards any guests your tenants have in the property and your insurance must cover them;
- depending upon where you are in the UK, there may be a requirement for you to register your business with the local or national authorities. As part of that, you may be obliged to show evidence of appropriate insurance cover. You can’t, therefore, just do without it if you were so inclined. You run the risk of getting into serious trouble.
If you’re in any doubt about these areas, it would be worth getting advice well before purchasing your target property.