Protecting your income with landlord insurance
The success of any business of course relies on customers actually paying for the goods or services they receive. This is just as true for a business based on letting property to tenants – the success of the landlord’s business relies on the tenants paying the rent as and when agreed. However, it is not unknown for tenants to default on that agreement in one way or another. Landlord insurance, therefore, often provides a useful means of protecting the property owner against such failures.
However well crafted the tenancy agreement between the landlord and his effective customers, there is always some risk that the tenant fails to keep his or her end of the bargain.
Choosing tenants carefully and ensuring that references are taken up when agreeing the tenancy might help to ensure that the letting generates the rent that is due, but – almost inevitably – some might fall through the net and cause you to suffer financial loss.
Landlords end up being out of pocket, for instance, if the tenant causes damage. Failure to pay the rent when it falls due is not the only shortcoming sometimes displayed by some tenants. Some may have caused deliberate damage to the property or items such as furniture, fixtures or fitting belonging to you, the landlord.
Still others might steal possessions owned by the landlord. The replacement of such items inevitably involves you in some additional expense, which potentially threatens the success of the business.
Following on from these types of situations, there are also potential legal expenses. Although you as the landlord have recourse to legal action to recover such costs from tenants, establishing legal liability itself comes at a (potentially high) cost.
The good news is that various landlord insurance policies typically offer financial compensation in order to pursue such claims against wayward tenants.
And that is not the benefit of a good buy to let insurance policy. It can protect you in other ways too.
Of course, there may also be cases where the tenant is not at fault, but you still face a financial loss. For example, where something happens to the property that renders it uninhabitable for a period of time, such as a fire, water damage or something else.
Typically, if your let property is uninhabitable for a period of time due to one of the risks covered under your insurance policy, it may pay out money in lieu of lost rental income.
So, landlord insurance might prove a valuable safeguard in helping to protect you against unforeseen, additional costs that arise when dealing with the worst offending tenants and, in so doing, help to protect your livelihood.
Tags: landlord insurance