If you have designs on being a landlord there are a number of things that you need to take into account that stretch far beyond the requirements of normal homeownership. Insurance is one such aspect of the role and it is one that many new landlords forget or don’t have full understanding of before they undertake their endeavours. Our aim with this little guide is to give you a bit more information about landlord insurance, as well as pointing out a few things that you should look out for.
Do You Actually Need It?
In a word – yes. While some may feel like they can get away with simple home and contents insurance, landlord insurance is designed to cover issues that are specifically-related to rental properties. Furthermore, the nature of having a tenant in the first place will often render other insurance cover, particularly contents insurance void.
A tenanted property needs landlords insurance because a regular household policy offers no cover for contents, buildings or third-party liabilities during periods in which the property is being let put.
As for what they contain, most landlord insurance policies are made up of two parts. The first, and perhaps most important, part is related to covering the structure itself and will be used if there is any need for rebuilds. The second will cover fixtures and fittings, such as carpets and light fixtures. It is also worth checking if the policy has some sort of cover against accidental breakage of windows or sanitary fittings, as these are amongst the most common issues that crop up with rental properties.
You may also consider adding specific contents cover, especially if you are letting a furnished property.
What Should I Watch Out For?
Underinsuring – As a general rule you should try to insure your property for as much as possible, as going to low may end up causing issues later on down the line. Rental properties are often subject to damage and trying to pay low may not result in you having what you need to cover the costs. It may save a bit of money in the short-term, but underinsuring is not recommended.
Check The Excess – In many cases the claims you will need to make as a landlord are fairly small. As such, if your policy has a high excess you may find that it is useless to you when dealing with the niggling little problems that often crop up in rental properties. Negotiate an excess number that you are comfortable with, but remember that the lower the excess the more your monthly payments will be.
Theft – It is worth keeping in mind that most landlord policies will only cover theft if it can be proven that there has been forcible entry into the property. Naturally, this means that they often don’t cover theft by tenants who steal items and then disappear. This is also often not an option on such policies, so ensure the deposit you take is adequate enough to cover any major thefts from the property.