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Everything you need to know about landlord property insurance

What is landlord property insurance?

Landlord property insurance is a blanket term which refers to a collective of covers designed to protect landlords against risks associated with rental properties. The cover would include buildings and contents insurance, landlords’ liability insurance, as well as other covers to protect a landlord’s rental property and the income from it.

Insurance for commercial and residential landlords, property owners and investors can be low down on the list of priorities and sometimes isn’t thought about until the point where it’s needed as part of a completion, or when requested. However, it is an important tool when ensuring significant investments are risk managed.

When choosing to invest in a property, lowering and transferring risk is important. A property faces several risks from fire, flood, escape of water, through to subsidence, loss of rent and malicious damage and everything else in between. Properties need to be protected by an insurance policy and choosing the right one for you is something Ravenhall Group can help with as we search the market and provide you with the best advice.

Buildings insurance for landlords

Landlords will need to ensure that they have some basic information to get a quote for landlords’ insurance. The rebuild value of the property is one of the most important factors and it should be assessed either by a chartered surveyor, as part of  any mortgage valuation or using one of the many services online, such as the free BCIS public rebuild calculator which is ideal for residential properties

It’s the policyholder’s obligation to set the sum insured and one of the elephant traps for landlords is to insure the property for the market value, Market Value and Rebuild (reinstatement) value are normally very different numbers. A building’s sum insured should always be the rebuild or reinstatement figure and not the market value.

Building’s reinstatement figure should cover site clearance following a loss, reinstatement costs of the house and anything inside of the property that should be considered buildings decoration, fitted kitchens or bathrooms and sanitary wear. In most cases, security systems and built-in entertainment systems could also fall under the definition. The rebuild value should also include things like Planning fees, architects’ costs, building regulations expenses as well as things like boundary walls fences and hard and soft landscaping,

Do you need insurance for your furnished rental?

Furniture and other contents in a furnished rental property can run to thousands of pounds, so protecting these goods is a key priority for most landlords. Particularly if you need to replace them quickly following a loss. In order to keep your property on the market, you may want to strongly consider insuring your contents. To understand the difference between contents and building insurance fully in your policy, you would need to read the definitions as they all differ slightly. However, as a generalised rule, Ravenhall Risk Solutions recommend the upside-down house principle. Simply put, if you turned the house upside down, what falls out is normally contents, what stays in is normally buildings.

Property owners’ liability insurance

If you own a property, you need to ensure that your legal liabilities are also insured. A person could be injured on or by the property, or their property could be damaged, and they may choose to hold you responsible. If they do, Property owners liability insurance will pay for your legal defence and also if you are liable any damages for your negligence.

Loss of rent cover, do I need this?

If something happens to the property such as a flood or a fire, it may be that whilst the property is being repaired, the landlord will not receive any rental income. As such, loss of rent cover can be added to the policy should a claim occur which requires the property to be vacated. Other optional policies and extensions can widen the cover to include rent guarantee insurance also if required, although this is normally a separate standalone cover.

What about a standard house insurance policy?

It’s important to note that most house insurance policies will not cover your rental accommodation. Whether that be fully let or even if you rent out a room, it’s important to declare your intentions to ensure you have the right cover. You will no doubt need to make sure that you have a dedicated landlord buildings insurance policy.

What else do I need to think about?

If that wasn’t enough for you to consider, you can choose to add other covers like tenant default insurance, accidental damage insurance and landlord legal expenses insurance too – depending on the risks you want to cover. However, the most important thing is to take advice from a broker who will find you the best deal and give you the best advice. If you would like to discuss more details about landlord insurance, contact our team.