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.

Empty properties – a greater risk

Insurance companies don’t like empty properties. The fact is that when empty, your property is at greater risk of break-ins, mindless vandalism and disasters arising from unnoticed troubles such as leaking pipes etc.

For all these reasons, if your property is periodically unoccupied then there is a greater chance you’ll encounter a problem and subsequently make a claim on your insurance policies.

That’s why some insurance policies may not cover your property for certain categories of risk if it is unoccupied. Checking to make sure that your policy does in fact provide insurance for empty properties might be a sensible precaution to take.

Your property is never unoccupied?

It’s possible that you have been lucky to date but sooner or later your property is going to be empty between lettings. You may also have to keep it unoccupied for a period if you need to make repairs or simply re-decorate. In those circumstances, you may be seriously at risk unless you have appropriate vacant property cover in place.

Other specialised risks

Your property is also a business venture because it generates income for you. If it’s out of action because of a problem, your income will disappear. That may be a major blow if you have a loan outstanding on the property – you’ll presumably want to get it restored and back into action as a fast as possible.

That’s not the time to suddenly start asking questions about what your policy does and does not cover!

In particular, it may be worth checking the position with regard to tenant-related risks as well as whether or not you have insurance for empty properties. These may include:

• ensuring that your tenants are covered against accidents and injuries sustained on your property;
• that you are also covered for general public liability;
• tenants that wilfully damage your property, it’s fixtures and fittings or contents (note that only a selected number of buy to let insurance providers offer malicious damage cover);
• the theft of your contents if the property is furnished.

This is not an exhaustive list and it may be useful to take further advice.

In summary, your property has special risks because it is being used for commercial purposes. Making sure that you have insurance for empty properties and which also covers other rental property risks is good business practice. It may end up saving you considerable amounts of money.

The call started well enough and then the man from BT became more aggressive and arrogant as the call continued, he questionned my ability to make decisions and the general success of the company on our onloine marketing campaigns.

When he was near enough shouting down the telephone I simply asked him to stop and suggested that we would not be doing business together, he took this reasonably well or so I thought!

Not even two minutes later the phone rang again and guess who? He was as equally rude and I asked him to never ring again. he went away and has so far not returned.

How do these companies get away with it? What a bazaar call.

But is that not what Friday’s are for!

Richard

Why is landlords’ insurance necessary?

If you use your property, or part of your property, for rental purposes then both legally and in terms of insurance, your property is a business. Your interests are commercial, you are gaining income from the property and you have responsibilities and obligations arising from both of those things.

This reality affects your risk profile and therefore how an insurance company will view your property.

For example, you may have:

• the usual risks associated with owning a property, such as natural disasters (storm or flood damage, for example):
• a property that is particularly vulnerable to problems due to vandalism or break-ins, while it is unoccupied for periods in-between lettings;
• claims against you for injuries suffered by tenants or guests while on your premises.

A standard home building and contents insurance policy is not suitable – nor valid – for a buy to let property. That’s why specialised buildings insurance for landlords is typically highly advisable.

What’s wrong with ordinary household insurance?

Nothing at all – providing you are talking about an owner-occupied property!

If your property is commercial, you could only obtain ordinary buildings and contents cover by making a false declaration, followed up by a claim under false circumstances should a problem subsequently arise. This may have serious legal and insurance related consequences and it is not a good idea.

If you already have owner-occupier cover and then start renting out the property (or even a part of it) you may find that your insurance immediately becomes invalid. Typically this may even apply to very short-term summer lets.

What about employees and service companies?

If you have employees that clean and service your properties or that act as caretakers, in some situations the law may demand that you are covered by employers’ liability insurance. This is typically not included in standard buildings insurance for landlords’ policies.

The position with respect to painters, decorators or service companies, may be a little more complicated. Even if they have their own company insurance, you may still have liabilities for their safety while on your property under public liability legislation. It may be worth ensuring that you would be covered for accidents they may have while working for you etc.

Having appropriate buildings insurance for landlords could make the difference between something being a problem for you or a financial disaster.

Any property can be a landlord property

Sometimes, you may not even have realised that you have become a landlord and your property a form of commercial property – ie. you are running a business! It can in fact, happen easily!

If you rent out your property for any period, even during the summer holidays, it becomes by definition a commercially rented property. If you rent out even part of your property (eg. the basement) for even a short period, then once again your property has become commercial.

As a result of either of the above situations, you have also become a landlord in the process.

Landlords and a landlord insurance quote

Whether you’ve just become a landlord or are a seasoned veteran, your insurance requirements are not the same as those of a typical owner-occupier and a standard building and contents insurance policy would neither be suitable nor valid for your needs

Tenants may be the source of your income but they also constitute risk – and a form of risk that does not apply to the owner-occupier.

You may also have to face the fact that there is a higher probability that your property will stand empty for periods of time while you’re in-between lettings or it’s being re-decorated etc. As a result of that, your property may be more likely to experience burglaries, theft and vandalism.

For all these reasons and more, insurance companies typically regard rented-out properties as being higher risk than those that are owner-occupied. That means that specialist buy to let insurance is required and you may need a landlord insurance quote.

Landlords’ Insurance – the risks covered

Typically, a rental property insurance policy will offer you protection against things such as natural disasters, public liability claims, break-ins, the theft of contents or fixtures/fittings and for all such events while the property stands empty between lets etc.

Less common are those policies that offer protection against wilful damage caused by tenants and that is something that may be worth thinking about given that not all tenants will have the same respect for your property as they would their own.

Standard property insurance & the landlord

Typically, a landlord’s property insurance may be slightly more expensive than if the property was owner-occupied. This is due to the additional risks mentioned above.

It is well worth avoiding the temptation of trying to use a traditional home building and contents insurance policy instead. In the event of a claim, you may be asked to declare the occupancy position and the insurance companies have methods of checking just who was occupying the property at the time of the problem. The repercussions for your claim and your ability to obtain insurance in future may be serious.

So, if you own a buy to let property, getting a landlord insurance quote for rental property cover may be the sensible way to ensure your investment is properly protected!

There are natural disaster type perils, which include damage from events like flood, fire and smoke, weather or storm damage and earthquake. Building insurance also may cover the secondary effects of many of these perils. So, for example, very cold weather may cause pipes to freeze and then burst causing damage when the thaw sets in.

Other perils may be of a more man made kind and may include riot, theft and possibly malicious damage.

Landlord building insurance cover can help you manage the effects of damage caused by these perils (though it is important to note that policy features and benefits do vary among providers and some may not offer all of the elements mentioned above – for example, not every buy to let insurance policy will cover malicious damage).

Contents cover

Unfortunately not all your tenants are going to be as careful and responsible with your property as they would be with their own. Buy to let building insurance on its own will typically not cover damage, either accidental or malicious, to your soft furnishings and fittings. For this type of cover you may need to take out buy to let contents insurance too.

Owners’ liability cover

Keeping your property in a state of good repair is typically one of the conditions of many landlord building insurance policies. There are good safety reasons for this.

If someone is somehow injured while in or around your property as a result of being hit by a falling slate for example or tripping over a loose carpet then if it can be shown to be as a result of poor maintenance on your part then they sue you for damages. Having a good level of public liability insurance may be a sensible step towards protecting yourself from large financial awards made against you.

Loss of rent

A good landlords insurance policy may also provide cover for loss of rent due to it being made uninhabitable as a result of an insured event. It may be worth noting though that this typically will not cover loss of rent if your tenant absconds, leaving rent arrears behind.

Unoccupied property

If your property is unoccupied, perhaps while you are waiting for new tenants to move in or if the building is undergoing renovation, then the situation with regard to commercial building insurance may change slightly. This is because the risks of something happening to your property are higher if it is empty.

For example, your property may be more of a target for thieves and vandals if it is unoccupied. Water damage from things like missing slates, broken windows or burst pipes may go undetected because no one is around and the consequential damage may cost a lot of money to repair.

It may be a sensible step to let your insurance provider know if your property is going to be empty for extended periods of time so that they can advise on what additional landlord building insurance may be appropriate in your circumstances, such as empty property cover.