If, for example, you were looking for a buildings and contents insurance quote, why would the insurance company typically quote more for a rented out property than they would for an owner-occupied one?

Rented properties – they are different

Buildings insurance for landlords needs to take into account that your building or property suffers from increased risk. This typically arises because, unlike an owner-occupied property, a rented building:

• may stand empty more frequently and for longer durations during renovations and re-decorations – typically properties are more at risk when empty;
• have tenants that do not exercise appropriate care of the property or behave responsibly and promptly if there is a problem (such as storm damage or leaks etc);
• have tenants that maliciously and wilfully damage it.

In all these areas, there is no real equivalent risk for an owner-occupier.

For these reasons, standard building and contents insurance will typically not cover a property that is being rented out – whether in totality or part. Specialist commercial buildings insurance for landlords is required.

As the price of insurance is to some extent based upon the insurance companies’ perceptions of risk, insurance for rental or buy to let properties is typically a little higher in price than standard cover.

When is a property a rental property?

The exact definitions here may vary slightly among insurance companies but in general terms, the moment you offer your property or part of your property for rental, you have become a landlord and a commercial business.

This may not only change the way you need to think about buildings insurance for landlords but other aspects of your insurance cover as well.

For example, as a landlord you may have additional risks of being on the receiving end of a claim for damages due to an accident on or around your property involving tenants or their guests. This may mean that you need a buy to let landlord policy that provides enhanced third party liability cover.

You may also need to give some consideration to your contents if your property is let fully or partly furnished. The risks of accidental or wilful destruction or even theft from tenants is real.

It may also be worth keeping in mind that as a landlord, you may have responsibilities towards individuals on your premises that may, in, some cases, be considered legally to be a form of employee.

As an example, if you’re asking a cleaning company to do work for you on your commercial property and as a result they suffer an accident or injury, you may be held liable under law for any claims arising. This may apply even if no formal contract of employment or work exists between you.

Employers’ liability insurance is typically required to cover that form of risk but it is not usually included in standard buy to let landlord insurance.

So, if you have found yourself, either through design or accident, suddenly in the role of a commercial renter, taking some time to research the implications for buildings insurance for landlords may be a sound investment.

A false economy

If you are looking for buy to let home insurance, you may notice that prices typically appear to be little higher than for some owner-occupier policies.

As most of us need to watch our bank balance, you may be tempted to:

• do without insurance;
• use an owner-occupier policy for things such as building and contents insurance;
• ask the tenants to supply their own insurance.

All of these routes may prove very risky and they’re unlikely to give you much if any protection at all.

Cheap landlord insurance versus other options

Unfortunately, it isn’t possible to starting thinking about comparable owner-occupier policies because the two situations are significantly different.

It doesn’t matter if the property concerned is a single room in your house or a complete flat in a larger block, once you rent it out it becomes a commercial property.

The period of rental is also irrelevant – if you let your house out for only 4 weeks per year during the summer then that activity is still considered commercial.

Once you start taking income from property rental then you become a landlord. Your legal responsibilities change.

So once you have a legal definition of being a landlord and your property is being used for commercial purposes, ordinary owner-occupier simply will not cover your activities.

It would be a serious misperception to believe that buy to let insurance companies cannot find out if your property is owner-occupied. They can! If you make a false declaration or claim relating to the nature of occupancy you may find your claim is rejected and you may also you have great trouble in securing insurance in future.

Finally, it is a myth that you can pass off your insurance liabilities to tenants:

• in the case of your public liability insurance (for injuries to tenants or visitors on or around your property) the law will look to you no matter what insurance the tenants may have;
• in the case of buildings and contents insurance, even if it were possible, you may wish to ask yourself whether you would trust your assets into the care of insurance that your tenants may or may not have.

Cheap landlord insurance exists

For all these reasons, it may make sense to ensure that you have the good solid protection of a landlord or buy to let insurance policy behind you.

Yes, the prices may be a little higher but your risks are probably also greater.

There are specialist providers of cheap landlord insurance on the internet that may be able to help put your mind at ease.

The first is that landlords insurance is different to the insurance cover you would need for your own home. There are obviously many areas of similarity such as;

• buildings cover against perils such are flood, fire, storm damage etc;
• contents cover;
• personal or owners’ liability insurance.

However, there are additional risks involved when you rent out a property and these can make the insurance requirements a bit more specific.

The main reasons for this are due to the additional risks that come with having tenants and from the fact that from time to time your property is likely to be empty.

In either of these cases your property may be more vulnerable to accidental or even malicious damage.

Even the most considerate of tenants are unlikely to take as much care of your property and its contents as you yourself would or as they would if they were owners rather than renters.

An empty property on the other hand can stand out like a sore thumb and can become a target for thieves or vandals. Damage caused either accidentally or wilfully may deteriorate over time if left unremedied and be more expensive to repair.

Using a standard home policy for a tenanted property would result in any subsequent claim being rejected and you may find it difficult to find alternative insurance elsewhere.

Getting the right mix of cover for your property may typically depend on a wide range of factors including;

• the type of property you have – house, flat etc;
• the type of tenants you cater for – short or long term, families, students etc;
• where your property is;
• is it furnished or unfurnished;
• are you planning to have the property lying empty while renovations or repairs are being carried out;
• if you are prepared to accept an excess.

If you find the prospect of sorting all this out for yourself a bit daunting then you may benefit from using the quote system on our website to get some options for landlords insurance tailored to your exact requirements and budget.

You may be tempted to do without insurance while your property is empty but this could be a very false economy indeed. When a property is unoccupied it may be more at risk than when it is tenanted. That’s why insurance for empty properties may seem to be expensive, particularly when this expense cannot be offset against rental income.

So what sort of additional risks apply?

Theft and Vandalism

Signs that a property is empty can act like a magnet for thieves and vandals. These can include obvious things like building tools and materials left lying about, rubbish accumulating in the garden or junk mail sticking out of the letterbox. More subtle indicators could be no lights going on as it gets dark or curtains not being opened or closed.

A stitch in time

If you are in your property and there is a leak of water from a burst pipe for example, you can take immediate action and turn off the water to minimise the damage caused. In an unoccupied property though, the leak could go unnoticed for some time and the resulting damage could be much more extensive and obviously more expensive to put right.

Covering the risks

A basic insurance for empty properties policy can provide essential cover for the basic insurance perils like fire, explosion, floods and earthquakes etc. More extensive cover is also available and costs of claims can be reduced if the property is checked regularly and necessary maintenance carried out. In fact, your vacant property insurance provider may stipulate that under the terms of your cover with them that you meet certain obligations, such as checking on the property on a very regular basis.

Keeping the property looking its best may help attract potential renters too.

Owners’ liability

It may be worth bearing in mind that even if your empty property does not have any tenants, someone could still sue you as a result of an injury that they may have sustained in or around the property. Property owners’ liability protection is an important part of any buy to let insurance policy whether the property is empty or not.

Up to date

Once your property is let again you may want to let your insurance providers know so that any necessary changes can be made to ensure that your cover reflects the fact that your property is no longer unoccupied.

You also may be interested in protecting your property with cover against accidental or even malicious damage by tenants, which is cover that may not be available as part of insurance for empty properties policies. (Do note that not all buy to let insurance providers do provide this element of cover).

What is it and why may you need it? Well, if you’re exclusively an owner-occupier then you probably don’t!

Buy to let property insurance is a form of insurance that will help protect your financial interests if you’re renting out a property or plan to do so. That may be necessary because the risks that come with a property you’re renting out are typically different (and higher in some respects) than with a property that is owner-occupied.

If you’re planning to rent out your property, even if only in part, you may need to:

• change your buildings and contents insurance to buy to let property insurance (sometimes called buy to let landlord insurance);
• think about your public liability insurance protection – this may come included in some forms of landlord insurance and it may be very important if a tenant or their guest is injured as a result of something attributable to the maintenance of your property;
• remember that you may be legally obliged to have an annual gas appliance inspection and safety certification.

It’s also worth keeping in mind that your position as a landlord may also expose you to risks if you ask someone to do work on your property on a casual basis. If they are injured, they could claim against you for compensation and you may not be covered by the public liability component of your landlord insurance.

In such situations, you may be deemed to be liable for the person injured under employment legislation even if they are not your employee and no formal contract exists.

As employers’ liability insurance is not typically included in buy to let house insurance, this may be something worth thinking about further.

Buy to let house insurance and the related risks, issues and laws, may be a little complicated and difficult to get to grips with. Getting advice and guidance may be advisable if you’re to avoid either making some potentially expensive mistakes and ending up with inappropriate cover.

So whether you’re a novice looking to make the transition to property rental or someone with considerable experience, understanding how you can reduce your risks through appropriate buy to let property insurance, may be very important. We’re here to help and please don’t hesitate to call us to see if we can assist.

Why?

Your property is by definition commercial and becomes so the instant that the contract is finalised and you’re the proud owner. The risk profile for your new acquisition is different to that of a property purchased by an owner-occupier and this is so even if you plan to live in part of the property and rent other parts of it out.

For a start, you’ll have tenants. The majority of tenants are responsible individuals but unfortunately you won’t be able to guarantee that’ll always be the case. Your property is therefore at risk from things such as wilful vandalism and theft of contents.

Another significant difference is that your property will probably stand empty for sometimes extended periods while you’re waiting for new tenants or it’s undergoing redecoration etc. Sadly, in such situations it is more vulnerable to a whole range of problems including unlawful entry, vandalism and theft etc.

It’s also the case that unoccupied properties may suffer problems simply because there is nobody present to spot a problem before it creates a mini-disaster. A leaking water cistern might be one such example.

So for all these reasons, specialised buy to let property insurance is usually highly advisable for a landlord. It’s also worth keeping in mind that standard home buildings and contents insurance will typically not be valid for rented-out properties.

It’s a fact that insurance can, at times, be a little complicated. It’s not always easy to compare different forms of landlord insurance to find the most appropriate cover and price and taking the cheapest may not always give you quite the cover you hoped for.

That’s where we can help with our experience and knowledge of the marketplace.

We are available via email, and on the telephone, and can outline various options and propositions to you so as to simplify the whole process and help you find the buy to let property insurance that’s suitable for your particular circumstances.

Yet the latest figures indicate that the latter parts of 2009 show a return to growth in mortgages advanced for BTL acquisitions.

It seems as if a little confidence is returning to the market after 18-24 months of real difficulties. Of course buyer confidence alone isn’t sufficient to drive growth – the banks and other finance sources also have to be prepared to lend and the figures may indicate that this is now happening.

Both the third and fourth quarters of 2009 showed growth in BTL mortgage lending which, coming after seven consecutive quarters of reductions*, has to be good news both for the BTL market and related areas of the economy such as those companies providing let properties insurance.

BTL lending in 2009 was still considerably down on the figures for 2007 and 2008* showing just how much lost ground still needs to be recovered. Even so, in 2009 11.8% of all mortgage lending remained targeted at BTL purchases*.

Deciding whether or not to enter the BTL marketplace is not a decision that you’re likely to make based on a single set of statistics but these figures do appear to show that buying properties with a view to letting them out continues to be something seen by many as an opportunity.

What is difficult to say is what exactly this growth may indicate for 2010. Many economic indicators appear to be looking a little more favourable than they did even 3-4 months ago. Most experts appear to agree that the recovery will continue though some suggest that it will continue to be fragile.

The general election will inevitably play a part in setting the direction for the middle and latter parts of the year. Yet with all the main parties seemingly agreeing that there is a shortage of affordable rental properties and the banks being put under increased pressure to free-up financing, the outlook for BTL in 2010 may be more promising that it has been for a considerable time.

* SOURCE: The council of mortgage lenders press release dated 11 February 2010.

It is the fact that your property is your business that’s important. That’s because the insurance you require needs to protect you against not only the conventional property risks such as fires and storms but also the commercial risks that are unique to rented-out properties.

Sadly, such risks do exist. The level of protection offered varies between landlords insurance policies and insurance providers but cover may be available for things such as:

• theft or destruction of your contents, fixtures and fittings;
• wilful damage to your property or fixtures and fittings caused by tenants;
• public liability insurance – to protect you against claims from people that they have suffered injury as a result of being on or within your property;
• empty property cover – to cater for those times when your property may be empty between lettings and is, as a result, more vulnerable to things such as forced entry, vandalism and unnoticed troubles such as burst pipes.

Of course, because it is providing greater cover, a landlords insurance policy will typically be a little more expensive than the usual owner-occupier home buildings and contents insurance. This factor may lead to the view that it would be possible to economise by using an owner-occupier policy.

That may be a grave mistake. In the event of a claim, you would be making a potentially fraudulent declaration and insurance companies do have ways open to them of checking to see if your property was being rented out at the time of the incident resulting in a claim.

It’s also typically advisable to be very cautious about even casual and informal lettings. Even if you rent out a part of your property for a very short period, such as a room or two during the holiday period, your property may immediately be deemed to be a commercial concern and therefore your existing owner-occupier policy would become invalid.

Whether your property is an apartment or a fully detached house, it is providing you with income. That income may be critically important to you and taking chances with it may not be advisable. If you’re unlucky enough to suffer a problem with the property that puts your income at risk, you will want to get it fixed as fast as possible.

Having the appropriate type of landlords insurance in place may be key to helping to achieve that.

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.