Letting property insurance – avoiding financial pitfalls
Letting out a property can often be an effective way of generating some income and hopefully benefiting from increases in its value over time. There are risks involved of course but you can help protect yourself against some of these by ensuring that letting property insurance protects your asset.
Standard home building and contents insurance is unlikely to provide cover for properties which are let out – specialist letting property insurance may typically be needed.
The main areas you may need to consider are:
- commercial buildings insurance;
- buy to let contents insurance;
- public liability insurance;
- unoccupied property cover.
Your bricks and mortar
Regular maintenance of any property is a good idea. Keeping your bricks and mortar in a state of good repair may be of the utmost importance if you are looking to maximise rental revenues.
Being able to deal with the more unexpected events though is often easier if you also have the protection of buy to let building insurance behind you. Covering things like storm damage, flood, fire, theft and other unexpected occurrences, commercial buildings insurance may give you the means of getting things back to normal as quickly as possible.
Some letting property insurance policies may even provide cover for loss of rent while repairs are being carried out due to an insured risk making your property uninhabitable.
Your contents
Many properties these days are let as furnished or partly furnished. It may be a sad though not unsurprising fact that tenants may not take as much care of your property as they would of their own. Small easy to fix things may be ignored until they’ve become big expensive to repair things. There’s probably not much you can do about this apart from trying to make sure that your buy to let contents insurance gives you as much protection as possible.
If may be worth bearing in mind that your letting property insurance may not cover theft of your property by your tenants. Some contents policies only cover theft following a forced entry and exit by individuals who have no legal right to be on the property.
Your responsibility
If someone is injured as a result of some failure on your part to maintain your property in a state of good repair then they may sue you for what could be a fairly large sum of money. They don’t even have to be on the property at all. Someone walking past on the street and being injured by a falling slate is all it may take to see you seriously out of pocket if you do not have the protection of public liability insurance.
Rental gaps
Tenants can come and go and it may not always be possible to achieve 100% occupancy of your property. From time to time you may need to carry out some redecoration or renovation work.
If your property is going to be vacant for any significant length of time, the conditions applied by your letting property insurance will typically change. This is mainly because an empty property is more at risk from thieves and possible deterioration due to unnoticed damage than one that is lived in. Checking with your insurer in these circumstances may be a sensible move – they may ask that you change your policy to a vacant property insurance policy, for example.