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The Ultimate Guide to Landlords’ Insurance

Choosing to become a landlord is a big decision. It brings responsibility not only for your own finances but also another family’s home.

The attractions are numerous; a property can be a great investment, as good as a pension in some areas. But it will take time and money. Your chosen property will degrade and need repairing. Thus, you have both a legal and moral obligation to a tenant to ensure repairs are carried out quickly and effectively.

Also, aside from any mortgage on a property, there are other financial obligations you may not have considered, such as landlords’ insurance. Some aspects of the property are your responsibility, and some are not. To help guide you through this particular minefield, we have put together a quick guide to ensuring your rental property.

Buildings

There are many rules and regulations landlords have to comply with, however, as News Anyway explains there is no legal requirement for insurance on a property. There may be a requirement by your mortgage lender, should you have one, for the protection of the building, which is standard in a house transaction. This protects the fabric of the building and ensures the mortgage company’s asset is protected against severe damages.

Contents

Contents insurance can cover a multitude of possibilities including accidental damage of property and of course, theft. In the winter, Property Reporter claims burglaries go up 30%, increasing the risk for tenants and homeowners alike. However, it is not your responsibility in most instances. If a tenant wishes to secure protection for their belongings, they need to do that themselves. The only exception may be in an HMO, where a landlord can offer contents insurance for the whole property.

Liability

A landlord can get separate liability insurance, which covers against damage and injury to people visiting the property. Each policy is likely to be different in terms of what is and is not covered. But, liability insurance does help protect against claims for damages.

Tenant Default Cover

One serious risk that landlords run is the non-payment of rent. Over the last year, evicting tenants in the United Kingdom has become increasingly difficult under the pandemic regulations, and that could seriously affect a landlord. If you have just one property that you rent out, that could mean you have to cover two mortgages without income. To protect against that eventuality, investigate tenant default cover, which should afford you some protection should your tenant stop paying.

Landlords

Many other areas of a landlord tenancy agreement can be protected by insurance, but one option many opt to take is protection designed solely for landlords. This will usually include liability, buildings and a range of other elements. The landlord policies listed on HomeServe explain how they have been designed specifically to cover repairs and emergencies at rental properties. A landlord can get protection against a burst pipe or faulty boiler, for instance.  Such protection minimises the financial impact should a disaster occur. These policies are also great for tenants. Particularly because they can often deal directly with the insurer. Thus, lessening the workload for a landlord with multiple properties.

Conclusion

Ultimately, you can protect as much or as little as you want in the eyes of the law. In fact, much depends on your approach to your own finances and the security of your tenants. As we examined in our article Basic Mistakes to Avoid When Choosing a Life Insurance Policy, it is easy to fall into the trap of under-specifying what you need, choosing cheaper premiums or procrastinating and putting off seeking coverage until it is too late.

Make sure you understand your tenants, your property and your own financial obligations and restrictions, and choose a policy that balances affordability with a peace of mind.

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