While being a landlord can be an excellent form of income, without the right protection in place for your income and property, you could find yourself in an awkward financial position. Without house insurance for landlords, you face a serious financial risk as well as significant legal implications which can have disastrous consequences.
Already have home insurance?
Many landlords will assume that the fact they have home insurance on the property, means they will not need specific house insurance for landlords. Home insurance is not designed to cover all of the rental activities. In fact, home insurance is usually very generic and works on the principle that the property is ‘owner-occupied’.
Instead, specific landlord insurance has greater flexibility to cover a range of issues and makes sure that you have protection for all of the explicit risks that you face as a landlord. If you try to claim on your home insurance as a landlord, then it is likely that your insurer will refuse to pay out, which could leave you with a considerable financial loss.
It is important to remember that it is not the responsibility of the tenants to have home insurance either, although as a landlord you should strongly recommend that your tenants have contents insurance and even renter’s insurance to cover their own possessions while they stay in your property.
Four reasons that you need specific house insurance for landlords:
- Higher liability cover
A typical home insurance cover is likely to cover the essential aspects of your home such as the buildings and contents. However, as a landlord, there are additional responsibilities such as if a tenant does not pay rent. When this happens, you may be forced to take them to court and need insurance to cover the high legal fees involved in a court case.
When you own a property, insurers will know that you will not deliberately damage your property which means they can lower the cover amount. However, with tenants who could deliberately damage your property, they know you will need higher cover and protection for any unforeseeable event. As well as paying to repair the damage, it could leave your home uninhabitable, which may mean you lose out of rental income too. All of which would not be covered by a typical home insurance policy.
- Building insurance
As a landlord, your property is your income. Should anything happen to the building, then you could lose your revenue stream. With this in mind, building insurance is a critical part of landlord insurance. Building insurance will protect you from the costs of rebuilding your property should there be an event such as;
- Fallen trees
- Draining, heating or electricity problems
When checking for building cover within your landlord insurance policy, it is important to check the level of protection and the rebuild value that is estimated for your property. You need to make sure that you have to right level of cover to protect your asset and business.
- Landlord contents
Landlords will often let their property unfurnished. Whether you decide to let your property as unfurnished or furnished, you will still need proper landlord contents insurance which will not be covered by a traditional home insurance policy.
Even as an unfurnished property, you will still need landlord contents insurance to protect items such as any white goods, carpets, curtains and blinds in your property. Depending on the cost of the contents left in the property you can lower the cover amount to help save on your premiums. However, those you rent their property fully furnished to will usually need a higher level of contents cover in the landlord insurance policy.
- Emergency cover
If you are reducing the cost of renting by not employing a letting agency to manage your property, then landlord emergency cover is a vital and specific policy not found in a home insurance policy. Emergency cover will make sure your tenants have problems solved quickly when needed.
This type of landlord-specific cover provides your tenants with round-the-clock access to a team of professionals and tradespeople who can come and fix urgent problems without charge. From lost keys to a burst pipe or a boiler breakdown, this level of emergency cover can provide help to your tenants when they need it most and can protect your property from further damage in the process.
It is worthwhile checking whether your emergency cover in your landlord policy covers alternative accommodation for your tenants, should your property become uninhabitable through an emergency situation.