Renting out property can be a lucrative investment opportunity. However, as with many lucrative investment opportunities there comes a degree of risk as well. Being a landlord can be expensive. As well as being responsible for maintaining the building, you may also have to protect contents as well. Furthermore, if renting out property is your primary source of income, can you afford to pay the mortgage if you have no tenants?
Landlord insurance can help landlords to cover the cost of risks. It can help to protect your property, your tenants and yourself. There is a stark difference between home insurance and landlord insurance. If you claim on home insurance for a rental property, your insurer may refuse to pay out. With that in mind, it is essential to have a specialist landlord policy.
Many insurers offer landlord insurance, with each company providing different cover options and policies, it can be difficult to know which insurer to choose. So often, we want to go for the cheapest insurance policy, but is that really the best idea?
Do I need landlord insurance?
Landlord insurance is not compulsory, or a legal requirement. However, most mortgage companies will require you to have landlord insurance for a buy to let mortgage. As well as this, you need to make sure your mortgage company grants permission for you to let out the property. Failure to do so will mean you are breaking the terms of your insurance.
Why the cheapest landlord insurance may not be the best
When we buy insurance, it is tempting to opt for the cheapest policy. However, before choosing the policy instantly, it is wise to assess the company and review what would be included in the policy.
Some insurers will offer very cheap insurance. However, when it comes to claiming, they can be very slow to pay out or may look for loopholes to prevent them from having to cover your expenses. With time-critical issues such as repairing your building to make it habitable for tenants, the cheapest landlord insurance may not be best. Ideally, you should check the reviews and reputation of the business to make sure the company is honourable and put you, the customer, first.
Another reason why landlord insurance may be cheap is due to the fact it only covers the basic aspects such as buildings insurance and possibly property owner’s liability insurance. If you have the finances in place to cover the potential costs of your premises, then the bare minimum of insurance may be enough. However, if you need to further financially protect your investment, then you may find that spending a little more on insurance can save you vast amounts of money in the long term.
When you are deciding on how cheap to go for your landlord insurance, it is worthwhile looking for all of the aspects included in the policy and which ones you need and which you can afford to leave out in order to lower your premiums for the cheapest landlord insurance quote.
What is included in landlord insurance?
For many policies, you can tailor your premiums so that you only include the aspects that you need. Some areas that may be included in your insurance cover include;
- Building insurance
Building insurance can cover the cost of rebuilding or repairing the building in the event of damage. This may include situations such as fire, storms or flood; it may also include malicious acts such as vandalism.
- Contents insurance
If you rent your premises out as furnished, then you may want to include contents insurance to cover appliances and furniture. This insurance will only cover the contents that you own and not that of your tenant. In the event of theft or fire, then contents insurance can help to pay for replacements.
- Loss of rent
If your tenants have to move out of the property because it becomes uninhabitable, then loss of rent can help to cover your costs and your mortgage. If a tenant has failed to pay their rent, then this may be included in tenant default insurance. As insurers can vary in their policies, it is important to check what circumstances are covered for loss of rent.
- Fixtures and fittings
In some cases, fixtures and fittings will be included in buildings insurance, but if you have a freehold property where buildings insurance is already covered, then you may only need fixtures and fittings to help cover the cost of repairs and replacements.
Which insurance for landlords is right for you?
With many aspects of landlord insurance, as well as companies offering different levels of cover, choosing the right insurance for you can be confusing. Fortunately, Compare Insurance is here to help. We will source competitive quotes from our panel of insurers to find the best quote to suit your needs.
Give us a call on 0333 344 3705 and find out more.