If you`ve bought a property with the intention of renting it out, you may think a standard home insurance policy is sufficient to cover your needs. However, what if the there was a rent dispute or you lost rent as a result of an insured event?
This is where landlords` insurance comes in and here we look at how these policies work and how to get a good deal.
What insurance obligations do landlords have?
As a landlord, it is your responsibility to take out buildings insurance on your property. Buildings insurance covers the property`s structure as well as its permanent fixtures and fittings and in some cases underground pipes and cables, glass in doors and windows and even outbuildings. Typically, buildings insurance protects the home against risks including storm damage, malicious damage, fires, flooding and theft - check the policy`s terms and conditions for exclusions i.e. Circumstances in which you will not be covered.
Many landlords assume that this is where their obligation ends - however, what about the contents you own that stay inside the home? Even if the property is not furnished, chances are you own some of the contents, such as carpets and curtains. As such, you should look for a policy that offers contents insurance with a low sum insured to protect these items.
What does landlords insurance cover?
Landlords insurance is designed to meet the needs of property investors with high policy limits on buildings insurance and low limits on contents insurance. There may also be a number of features designed specifically for landlords, such as:
- Accidental damage cover: Typically accidental damage cover only protects electrical items within a home, so look for extended cover to protect your contents.
- Employers` liability cover: If you own a series of properties and hire staff to maintain or run them for you, you are obliged to have employers`liability cover that protects you against compensation claims made by employees, such as if they are injured at work.
- Home emergency cover: Typically, it is the landlords` responsibility to arrange for repairs to a rented property following an insured event. Home emergency cover is usually available as an optional extra with landlords' insurance and usually provides a call-out from a professional in the event of the loss of an essential service.
- Legal cover: This protects landlords against legal issues such as rent disputes, or for the eviction of squatters.
- Public liability: Protects you against injuries to third parties or damage to their property - for example if a tile fell off your property`s roof and landed on someone`s car.
- Rent guarantee: Covers the loss of rent if a property is unoccupied due to an insured event - alternative accommodation costs may also be included.
- Unoccupied home insurance: This covers a property while it is unoccupied (and therefore usually more vulnerable) for a pre-determined period.
How to get a good deal on landlords` insurance
Insurance companies base premiums on risk - i.e. the more likely you are to make a claim, the higher your premiums will be. Lowering this risk will usually lower premiums - so consider fitting security devices to protect the home against theft; and install smoke alarms and fire extinguishers to prevent fires getting out of hand. Paying premiums annually is also advisable to avoid monthly interest charges and you could also consider increasing your voluntary excess, although it should be kept at a level you can comfortably afford.
Use a comparison website to compare quotes for landlords` insurance and consider taking out a policy that combines both contents and buildings insurance as this could earn a discount.