Is home insurance enough if you are a landlord?
So what should you be thinking about?
Your normal home insurance policy is designed for home owners not landlords. As a landlord you have other things to worry about, such as:
- Your mortgage company insists you have a landlord insurance policy
- Rent not being paid
- Tenants getting injured at your property
- Tenants damaging contents of your property
- People being injured while working on your property
Do you have a buy to let mortgage?
If you only have a standard home insurance policy, you may be breaking the terms of your mortgage. Make sure you check with your mortgage company what insurance you need.
Home Insurance and Landlord Insurance both offer buildings cover. So what do I need to know?
traditional home insurance policy will offer buildings cover but make sure you check with your insurance provider if it’s ok if you rent out the property. You also need to make sure you get the right level of cover. Here is a little guide on how to work it out.
- Work out the correct re-build cost of your property, this is not the same as the market value of the property, as this is based on the land value and location of your property.
- Use the rebuilding cost calculator supplied by the Building Cost Information Service, commissioned by the Association of British Insurers, to help get an estimate.
Do you rent out your property/properties furnished which could include carpets, curtains, a fridge or sofas?
If you do, then chances are you will need landlord contents cover. Most home insurance policies will not provide cover for contents if a tenant damages something. A landlord policy will provide cover for the cost of replacing or repairing these items. When buying your cover make sure you check how much cover is offered as standard, you can usually add more cover if you need it.
Do I need to provide cover for my tenant’s contents?
Remember you are not responsible for your tenant’s belongings but it would be worthwhile letting them know, as they will need to get their own cover.
Do you want cover if you or your tenants have an accident and cause damage to your property?
Accidental damage cover is either offered as standard or as an option on most landlord policies. Most home insurance providers will not provide cover if tenants have an accident. For example, if you or your tenants accidentally smash a window or drop something and it cracks a sink, accidental damage cover will cover you.
There are a number of other covers you may need as landlord which a standard home insurance cover is unlikely to offer
What would you do if someone got hurt on your property and wanted compensation?
Say if a tenant were to fall down the stairs because you had not maintained them properly, they could take legal action against you. Property Owners Liability cover will provide you with cover if your tenants decide to pursue legal action for any injuries, medical expenses or loss of earnings. If you decide you need cover, you also need to think about what level of cover is right for you. For example, if you have tenants who earn a lot and they sued you for loss of earnings, the damages awarded to them could be high.
Do you employ people to work on your property including on a casual or volunteer basis?
A lot of landlord’s don’t think they need employers' liability cover as they don’t have a team of people employed to work on their property. If you do employ people on a casual or volunteer basis such as a cleaner, handyman or gardener you will probably need cover. If, for example, they injured themselves on your property due to it being poorly maintained they could seek compensation. Employers' liability cover will provide you with cover for any legal costs and compensation claims.
Could you still pay your mortgage if your tenants couldn’t pay rent due to an insured event?
It’s a good idea to choose a landlord insurance policy that covers for loss of rent. This will cover your lost rental income if your tenants can’t stay at your property after an insured event such as damage from a flood. Some policies also cover the cost of alternative accommodation for your tenants if they have to move out of the property.
Could you cope if you had any unexpected legal costs?
If you are faced with unexpected legal costs, such as contract disputes, debt recovery and evicting squatters, then legal expenses cover could help.
Is your property likely to be unoccupied?
If your property is likely to be unoccupied from time to time? Make sure you check with your insurance providers to see if you are covered.
To provide this service we work with Arthur J. Gallagher Insurance Brokers Limited, one of the UK’s largest insurance brokers.