Some basic principles

If you rent out a property or even a part of your own property, then you typically cease to be a private owner-occupier.

You have just entered the world of the landlord and your risks become landlord risks rather than owner-occupier risks.

If that sounds a little like playing with words – it isn’t. It’s an important legal and insurance distinction.

If you need to make a claim

In spite of what you may hear from some misinformed individuals, insurance companies typically have ways of finding out whether or not a property was owner-occupied or rented out at the time an incident happened that resulted in a subsequent claim.

Try to make a claim on the wrong type of policy and typically you’ll see your claim rejected.

So, why should the insurance providers care whether or not you have let property insurance?

That’s simple – it’s because your property has a different risk profile if it’s rented out than if you live it in exclusively yourself.

These risks include things such as:

• tenant related risks (eg. accidents and injuries they sustain as a result of your property and for which they sue you);
• empty property risks (your property may stand empty for periods while waiting for new tenants or redecoration etc).

Insurance providers have created specialist let property insurance and vacant property insurance policies to protect you against those and other risks and if you don’t use that type of policy, then it would be unreasonable to expect the insurance provider to offer you protection.

Finding suitable cover

Of course, we understand that sometimes definitions and insurance can be a little complicated and finding the cover you need for your own individual circumstances – and at a realistic price – may sometimes be difficult and time-consuming.

The good news is that we can help! Whether you simply require a more detailed explanation about the differences between owner-occupier home and buildings contents insurance; buy to let insurance; and vacant property insurance, or you are looking buy landlord insurance, then you are in good hands!

You can either get a quote and buy landlord insurance online or give us a call on our freephone number. Unlike some other insurance providers, we don’t hide behind our website and make it hard for you to contact us – we have an experienced and professional team dedicated to helping you get the most appropriate solution for your buy to let or vacant property.

Taking no chances

Your property may be a part of your plans for future financial prosperity and stability.

Gambling with that by having inappropriate insurance might be foolhardy. That’s why taking the time to ensure that you have a suitable form of let property insurance in place may be a smart move.

The reasons are clear. If you are a landlord renting out a property for commercial reward, then it is both a capital asset for you and a business.

If you’re unlucky enough to experience a problem with your property, not only could that asset be at risk but so to could be an important part of your livelihood.

What could go wrong?

Well, there are the usual suspects relating to natural disasters such as fire and flood.

Although that’s perhaps not news in terms of property risks, what does make a rented out property different is that it also carries additional risks that typically don’t apply to owner-occupied property.

That may include things such as:

• intentional damage and vandalism by tenants;
• tenants (or their visitors, families and friends) that are injured on your property as a result of defects;
• problems caused to the property while it is standing empty (eg. between individual rentals or perhaps while undergoing refurbishment).

Of course, an owner-occupied property may also stand empty for a period and that may generate insurance issues but this may be far more prevalent in the case of rental properties.

By virtue of those additional risks, standard owner-occupier home buildings and contents insurance won’t be sufficient and specialist insurance for let properties exists to provide appropriate cover. Trying to use an owner-occupier policy to provide you with cover in a buy to let situation may prove to be disastrous should you need to make a claim.

It may be that you’re not immediately sure whether your letting activities constitute a full commercial rental situation and you may be unsure what is the most suitable landlord insurance solution for you.

How we can help

If that is the case, we would be only too happy to offer help if you have any doubts at all in that respect. Simply give us a call on our freephone number or email us, and we’ll arrange to call you back.

There is no obligation to buy, either!

In summary, to make a success of a property letting business, you’re going to have to take your business seriously – and that includes understanding and managing your risks.

It is there that insurance for let properties may have an important role to play. We’d welcome the opportunity discuss – and, if you so wish, help you find – the most appropriate landlord insurance solution for your needs and your budget.

The reality

The insurance risks associated with a buy to let property (or a property you have decided to start letting out in full or part) are typically higher than for an owner-occupied one.

Insurance companies typically know that only too well and that’s why they may charge a little extra for landlord or buy to let insurance compared to a standard owner-occupier home insurance policy.

So, insurance companies do care very much indeed about whether or not your property is rented out as it affects the risks they’re covering for you.

The owner-occupier policy myth

There are two potential scenarios here:

• you’ve started renting out all or part of your property currently covered by owner-occupier insurance; or
• you’ve got a buy to let property that you’ve taken out an owner-occupier policy for.

In either case, you could potentially be in trouble if your property suffers a problem.

In the first case you may have invalidated your existing policy.

In the second you have made a false declaration for the purposes of obtaining insurance. If you followed that up eventually with a claim, you could be found guilty of making a fraudulent claim and that may be a serious offence.

The knowledge myth

You may sometimes hear apparently sage words to the effect that your insurance company would never know. Believing that may prove to be another grave mistake!

To the contrary, insurance companies do have ways of checking the nature of the occupancy – particularly in the event of a claim. Being caught out could have serious consequence both in terms of your claim being refused and you being unable to secure insurance in future.

Getting the most suitable cover isn’t cost-prohibitive

All this may be unnecessary.

The good news is that typically the cost of landlord insurance is only a relatively modest amount higher than that of owner-occupier cover but will give you the peace of mind that your asset is properly protected.

Through our service, we can help you find suitable letting property insurance at a price that suits your budget. You can do this in one of three ways:

• use our website and get a landlord insurance quote and buy online;
• contact us via email; or
• if you prefer to speak to someone, then call our friendly team to discuss all your letting property insurance options. We are here to help!

Why may it be advisable to have such a policy?

Property as a business

Property is often regarded as something you live in. In fact, if you have a buy to let UK business, then property for you is typically more about renting out than living in.

In any business, it typically makes sense to protect your assets as they may relate directly to your ability to earn money. In the case of rental property, if your property is out of action then it’s unlikely to be earning you money.

Even worse in that scenario is if you have an ongoing mortgage on the property to pay at the same time. You’ll have all of your costs but none of your income – not a scenario traditionally seen as being a healthy prospect for any business!

Insurance for let properties

Your property may be at risk from many different sources and the risks may be higher than for a comparable owner-occupied property. It may not be a pleasant thought but the reality is that your tenants are not only a source of income but also significant risk.

In recognition of that fact, typically insurance companies won’t cover rental properties through a standard owner-occupier buildings and contents policy. To ensure that you are fully protected, you may need to take out a specific policy that provides insurance for let properties.

This isn’t just an issue for the landlord that rents out an entire property or a flat in a block as a professional. It may also apply to the owner-occupier who suddenly decides to start renting out a few rooms of their house during the summer.

If you’re gaining rental income from a property then typically any existing owner-occupier insurance has become invalid and you need some form of landlord insurance.

Risks covered

Landlord insurance may need to cover you against a variety of generic risks including:

• buildings, fixtures and fitting;
• contents;
• third party public liability;
• unoccupied property (.g. during repairs/re-decoration).

Some policies may meet some components of your legal expenses in the event of a problem though the levels and coverage varies. For example, some may not support the legal costs of pursuing tenants for rent arrears or evictions etc but will help pay for loss of rental income due to a property being uninhabitable due to an insured risk.

Buy to let landlord insurance

So, as a landlord, you have risks. That may come as no surprise but an appropriate insurance for let properties policy may help you rest a little more easily at night!

Property risks

The fact of the matter is, your property and asset is very much at risk. While it’s true that any property of any type is always at risk, in the case of rental properties the risks are different and in some cases, actually higher.

This typically changes the parameters of a decision regarding building and contents insurance if, for example, you’re looking to buy to let in the UK.

Let’s consider an individual house.

If you’re the owner-occupier then it’s presumably fairly unlikely that you’re going to suddenly decide to damage your own property and contents. You’re presumably equally unlikely to ignore a problem such as a small leak until it suddenly turns into a disaster.

If you trip and fall down your staircase, you probably won’t decide to sue yourself for compensation.

None of these things, however, can be presumed if the house has been rented out and now has tenants in it. Your risks are simply higher.

Insurance for let properties

In a nutshell, that’s why standard owner-occupier home buildings and contents insurance just won’t suffice. Such policies are not applicable to buy to let properties and typically become immediately invalid the moment a property is rented out.

The insurance industry does provide policies for landlord insurance. These are typically a little more expensive than those for owner-occupied properties but the difference is explained by the additional risks carried by the insurance providers.

Exclusions

Insurance for let properties typically provides cover for buildings and contents and public liability. Some may cover malicious damage and theft arising from tenant occupation – but not all, so always check what the cover entails. It may also be worthwhile checking to see that they provide cover for empty properties (eg. vacant property insurance for in between rentals etc).

Typically they won’t cover employers’ liability (if you’re employing staff), nor some forms of legal fees or claims arising from lost rental income due to absconding tenants.

Taking the time to check

Your property is a major investment. Given the amount of money you may have spent on it, taking the time to think about the insurance you require to protect it would appear to make sense.

There are specialist providers of insurance for let properties offering a range of products and policies to suit most requirements. Finding out more might be a smart move.

The cover

It’s easy to assume that similarly priced policies must cover the same risks, but this may not necessarily be the case. Let property insurance typically covers damage caused by a number of structural risks, including:

• storm;
• fire;
• flood (depending on where the property is);
• plus the contents (if applicable).

The real differences between policies can often be found in the financial part of the cover. For instance, some insurers may cover loss of rent where the loss is caused by an insured peril. So if the worst happens and your property burns to the ground in a fire, your tenants cannot live there and will not be paying you rent. Not only do you need buy to let buildings insurance for the rebuilding costs, but you also need to cover the amount of money that you would lose in rent – especially if you have a mortgage on the property.

Also, the extent of legal expenses cover (which is often available as an optional add-on) provided by insurance providers varies widely so always check exactly what is on offer.

The service

If you need help choosing a let property insurance policy, we are easily available online for guidance on what may seem to be a complicated issue. On the other hand, sometimes there is nothing like talking through the details with a “real” person, in which case please pick up the phone and give us a ring!

Our staff are professional, friendly and knowledgeable, all of which may help when you are making an important decision like choosing landlord insurance.

The price

Finally, given that your buy to let property is primarily an investment, the price of the cover will be an important element to take into account. No claims discounts may be available, as well as multi-property insurance, so do make sure that you are getting as much bang for your buck as you can!

Also, if you are stickler for safety and security, always mention this to your provider. You might get a discount on your let property insurance for having the latest locks and alarms installed.

The reason for this is fairly simple. If there is a problem in your property caused by something like flood, storm, fire etc and it has to stand empty while repairs or renovations are being carried out then you won’t be getting any rental income.

If you have no landlord building insurance at all, then you will be faced with finding the cost of repairs yourself as well as having to suffer the loss of rental income.

Worse still, if someone is injured as a result of your property, tripping on a loose floorboard or being hit by a falling roof slate for example, then they could sue you for damages. Without property owners’ liability protection (which is included in many landlord building insurance policies), you may be facing a ruinous claim for damages

Insurance for buy to let property may help you cope with these eventualities.

Standard house insurance won’t do

Standard house insurance may provide many of the same basic areas of cover as buy to let house insurance and you may find that it is a little cheaper. Landlord building insurance though, has to take additional risks into account and this wider cover does tend to mean that premiums may be higher.

Using private house insurance for a rental property will invalidate any claim made and may make it more difficult to find insurance cover in the future. This typically also applies even in a property that is part rented out.

Additional risk 1

Compared to a standard buildings and contents insurance policy, one of the main additional risks from a landlords insurance point of view is the tenant.

Your tenants are not going to take the same care of your property and the contents of your property as you would yourself, and some may even wilfully cause damage. Excluding the risk of malicious damage by tenants to one side (which some select insurers – including ourselves – do cover), if your tenants do not care for your property as they would their own you run risks such as:

• small faults may be left unattended to until they can be ignored no longer and what could have been easily fixed may turn into an expensive claim;
• the drip from the water pipe becomes a puddle that turns into a flood;
• the small tear on the sofa cushion or on the curtains that gets bigger and bigger until the item needs to be replaced etc.

Additional risk 2

When you rent out a property, you may have to acknowledge that it may be empty from time to time.

You could be carrying out repairs or renovations or just be waiting for new tenants to move in. In either case, when a property is empty it can often become a target for vandals and thieves or suffer from significant damage if a problem like a broken window goes unnoticed for too long.

Properties that are going to be empty for a long period of time (usually around 30 days, though this can vary among BTL insurance providers) will need vacant property insurance (also known as unoccupied property insurance). Failure to do so could see the cover offered under your existing rented property insurance being significantly reduced or even invalidated.

What’s right for you

Getting the most suitable level of buy to let landlord building insurance cover for you is important as it allows you to react to and resolve problems as quickly as possible to minimise rental loss. The success of your business may depend on it.

What sort of problem?

It could be just about anything including, but not limited, to:

• floods, leaks and other water damage;
• burglary and theft;
• vandalism whether through tenants or others;
• fire; and so on.

Why do I need insurance for let properties?

Insurance companies typically regard let property as being at higher risk in many categories than a roughly comparable owner-occupied property.

That arises principally from the fact that you have tenants in your property rather than the owners and that your property may well stand empty more frequently in-between lets.

What this also means is that standard owner-occupier buildings and contents insurance won’t cover a let property.

If you’re buying to let, then you’ll also need buy to let insurance immediately. If you’re changing use from a property that’s owner-occupied to rented out, then your existing insurance will probably immediately become invalid. You will need a policy that covers rented properties.

It’s worth keeping in mind that insurance companies have methods for discovering the true occupancy position of a property – particularly in the event of a claim. Trying to use owner-occupier cover to save a relatively modest amount of money might not be a smart strategy.

What does insurance for a buy to let property give me?

It’s always advisable to check cover carefully on a policy-by-policy basis to ensure that it will be suitable. Typically this form of insurance will provide:

• buildings and contents cover for a rented out property etc;
• wilful damage by tenants;
• burglary and vandalism;
• public liability insurance.

Employee liability cover is typically not included in a standard policy of this type.

Is buy to let UK insurance obligatory?

Generally no, however, interpretations of this may vary and if in doubt it’s always advisable to seek qualified legal advice. In some situations some forms of insurance may be mandatory if your property and tenants come under accommodation and guest laws rather than tenants.

On the whole, insurance for let properties is usually highly advisable.

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.

Insurance policies vary

This may appear to be being guilty of stating the blindingly obvious but some landlords may not appreciate just how specialised the insurance for their buy to let property needs to be.

Standard homeowner-occupied building content insurance UK policies will typically not be valid for a property that it let out either in part or total. That is not something you’ll want to discover only once you try and make a claim.

The problem is that as well as presenting you with income and opportunities, your property also brings with it unique risks due to the fact it is being rented out – and there are special insurance for let properties policies available to cover those risks.

How can the risks be different?

Your property may not be at any greater risk of, say, having its roof blown off in a storm than any other. However, it is different in two important respects:

• you have tenants and tenants bring risks of things such as claims against you for injuries sustained on your property as well as the possibilities of theft, vandalism and property damage through a lack of care and attention etc;
• it may stand empty for periods while you’re waiting for new tenants or it is under redecoration and renovation etc – this means it is at far higher risk of vandalism, burglary and so on.

As these types of risk do not exist for a conventional owner-occupied property, special insurance is required.

Getting appropriate cover – fast

Your business is all about being a landlord and not an expert in insurance. Sorting through the various landlords insurance policies, prices and conditions may often be time consuming and confusing.

That’s where we can help by using our proven knowledge of the market to help you find the solution that is appropriate for your situation, without confusing terminology or any obligation for you to buy.

Insurance for let properties is important and it may pay to avoid taking chances with it as a result of guesswork or insufficient knowledge.