If you have recently obtained a property that you plan to let or you have one that you already let, you have a responsibility to ensure your asset is as secure as possible. Since you are entrusting your property to complete strangers, you need to do your part to make sure it is fully protected, and one of the most important steps you can take towards protection is obtaining the correct insurance coverage.
Landlords need to be aware that standard home insurance is not sufficient coverage for let properties. Aside from the fact that insurers will not cover a house with standard insurance if the owner does not reside there, and will deny any claims if they were not informed up front of the fact that the property is being let, standard insurance does not provide the same benefits as insurance designed specifically for landlords. Landlords insurance, also referred to as let property insurance, includes the building and contents coverage that you would expect from standard household policies, but crucially it also includes options for rent protection, liability coverage and legal expenses. You can choose whichever options best suit your needs, bearing in mind that leaving yourself underinsured is not ultimately in your best interests.
Homeowners are unlikely to deliberately damage the home they live in, but tenants may not be as thoughtful since they do not own the residence and may be less caring about its upkeep. Moreover, problems such as blocked drains, leaky taps and roofs in disrepair may well go unreported and unfixed if the tenants believe it is the landlord’s concern and not theirs, and escalate into bigger problems that end up costing thousands to repair. Building coverage when obtained as part of a let property insurance policy will protect the structure against damage resulting from the usual insurable events that standard insurance covers, but it also includes protection against malicious and avoidable damage.
Contents insurance can be added to the building coverage, and this will protect a landlord’s contents against intentional as well as accidental damage. Even if your tenants are not willfully destructive, they are still less likely to treat your belongings with the same consideration they would their own and, depending on the type of tenants, may be unconcerned about engaging in potentially damaging activities such as hosting out of control parties. Contents insurance will pay to replace damaged items, such as kitchen and bathroom fixtures, carpets, curtains and any other items that belong to the landlord including appliances and furniture. You may not be particularly attached to the contents you have inside your let property, but the cost to replace them would soon add up to a substantial amount, and having contents insurance will save you from having to bear the cost.
It should be reiterated that insurers will not honour claims made on building or contents coverage unless the policy is specifically for a let property, since landlords insurance takes into account the fact that the owner is not in residence, whereas standard home insurance does not.
Of the other coverage options available under let property insurance, rent guarantee could be the difference between landlords continuing to meet their mortgage payments rather than losing their property. An unfortunate aspect of the rental market is that tenants cannot always be counted on to pay their rent on time, either out of sheer unreliability or because of circumstances beyond their control such as loss of income due to an illness or job layoff. According to National Landlords Association research published earlier this year, over a six month period forty-four percent of landlords reported experiencing rental arrears, which is a significantly high number considering most landlords rely heavily upon the regular monthly income to meet mortgage payments. Having rent guarantee ensures that you will still have money coming in every month, for a pre-determined period, should your tenants default on their rent, and may also include continued rental payment amounts during periods when the property is vacant and awaiting new tenants. An additional useful aspect of rent guarantee that landlords can opt for is legal expenses coverage, which will help landlords if legal action is required to evict tenants or force them to pay rent.
Let property policies can also include an option for liability coverage. If a tenant suffers an injury as the result of a fault with the property that is the landlord’s responsibility to maintain, liability insurance will help cover any resulting legal expenses and damages amounts awarded.
In short, standard home insurance does not provide adequate coverage for let properties. If you, as a landlord, want your buildings and contents to be covered with valid insurance, and if you want to take advantage of the additional coverage options that are necessary to protect yourself against potential liability and rent payment issues, you absolutely must obtain landlords insurance.