When it comes to renting out your property, one of the first recommendations will be to obtain buildings insurance. So, what is buildings insurance and why do you need it as a landlord?
What is buildings insurance?
When you own a property, you are responsible for its upkeep and repair. If you have a mortgage for the property you own, then many mortgage providers will stipulate that you must have buildings insurance as part of your contract with them. Building insurance means that you have financial assistance to carry out repair work should the building become damaged.
While many mortgage providers will stipulate that you must have buildings insurance, if your mortgage does not require it, or you own your property outright, then buildings insurance is not a legal requirement. However, the financial cost of repairing a building can be extremely costly and, with this in mind; buildings insurance becomes a necessity to help people cover the cost of repair.
Do I need buildings insurance as a landlord?
As a property owner, buildings insurance is your responsibility. Tenants will usually need coverage for their contents within the building, but the responsibility for the building itself is with the landlord. If you are a landlord, then you should make sure your property has buildings insurance at the very least.
If the building becomes damaged, then you not only need to cover the cost of repair, but you will also lose your rental income if the building is uninhabitable. You can protect your finances somewhat with building insurance which will cover the cost of repairs should anything happen to the property.
What’s included in buildings insurance?
Building insurance typically covers the structural aspect of the property. Usually, a buildings insurance policy will cover you for damage to the walls, roof and floors of the property. Some building insurance policies will cover fittings and fixtures, such as the bathroom or kitchen. However, it is important to check exactly what is included in your policy.
Buildings insurance policies will usually cover for accidental damage and damage that isn’t your fault. This means that you may be protected from property damage as a result of subsidence, fire, flood, falling trees and storms.
The cover may also include damage from vandalism, as well as vehicle collisions. Internal issues that you may be able to claim for would consist of oil leaks from your heating system, burst and leaking pipes and water damage as well as smoke and explosions.
When you consider that an average cost to repair a home damaged by a burst pipe is £25,000, buildings insurance can be invaluable for saving you a substantial sum.
What isn’t included in buildings insurance?
One issue that many landlords face in when they try to claim on their buildings insurance policy is when their property is unoccupied. Many policy providers will not accept a claim for buildings insurance if the property is vacant for more than 30 days.
For landlords, this is a risk as there is a higher chance that the building will be unoccupied for a more extended period of time. If your property is vacant for over the period determined by your insurer, you can usually let them know and have additional cover for vacant property. Make sure you keep your insurer informed and remember to check how long your property can be empty for before it invalidates your insurance.
Other aspects that buildings insurance will not usually cover include damage from pests, frost and gutter damage and leaks. General wear and tear are generally not accepted either.
What to consider
If your property has other structures nearby such as garden walls, garages, driveways and garden structures, then you may be able to arrange cover for these items under your general buildings insurance policy. However, you need to make it clear what you want to cover for before arranging your policy.
Another aspect to consider is if you have a leasehold property that you rent out. Some leasehold properties will have joint insurance to cover the whole building or estate. Others will have a share of the freehold and will, therefore, need to arrange buildings cover. It is wise to check and work out whether it is more effective to club together with others in the leasehold property.
Should landlords have buildings insurance?
Undoubtedly, buildings insurance can provide peace of mind and can save you money on expensive property repairs. However, different policies will have different exclusions and terms, so it is essential to understand exactly what you are covered for before proceeding.