Assets need protection

Your property probably constitutes a sizeable chunk of your financial wealth.

If it is severely damaged (or destroyed) or your contents lost, you may wish to have some form of financial help available.

That’s where buildings insurance for landlords (combined with contents insurance) may come in handy!

Having the right protection

If you were trying to insure your car, you probably wouldn’t try and make do with motorcycle cover – something that may prove useless in the event you had to claim.

That’s why it’s important for landlords to select specific landlords insurance cover rather than trying to make do with owner-occupier buildings and contents protection.

In the event of a claim, such a policy may prove to be invalid the moment the insurance provider discovered that your property was being rented out – even if only in part.

We would be only too pleased to explain this further if you are unsure about the position in relation to your specific property circumstances.

The protection offered

Typically, a buy to let type of insurance policy will provide cover for a landlord’s:

• property against a range of risks (or perils as the insurance documentation may call them) typically including natural disasters etc;
• the contents in terms of destruction or theft;
• risks and exposures to their tenants arising from third-party public liability property related problems;
• some forms of legal protection where these are attributable to one of the insured risks (so, they typically won’t cover you for expenses incurred in evicting tenants);
• some forms of loss of rental income (again arising from an insured risk so it typically won’t cover tenants that abscond leaving large rent arrears etc).

The dangers of self-deception

Typically, a landlords’ insurance policy may cost a little more than an owner-occupiers’ policy – but it is covering broader risks.

It’s worth noting that insurance providers do have ways of verifying the occupancy position at the time of an incident leading to a claim.

Your confidence

Many landlords have invested considerable sums of money in their rental property.

Investing just a little extra to obtain appropriate buildings insurance for landlords, seems to be a small price to pay in every sense!

So if your property suffers damage as a result of a storm, fire, flood etc, (known as ‘perils’ in insurance speak) then buildings insurance for landlords may typically provide help with the costs of repairing that damage.

Loss of income

The rental of your property may make an important contribution to your level of income. Getting repairs done as quickly as possible may be of paramount importance to you, particularly if you are losing rental income while these are being carried out.

Getting specialist advice on the right level of landlords insurance cover may mean that if you do have to make a claim, insurance related matters can be easily and quickly sorted out so that work can start as soon as possible.

You may even find that some buildings insurance cover for landlords may be able to contribute towards loss of rental income if your tenants have to move out of your property as a result of damage caused by an insured event.

Accidental damage

Even putting aside the idea that tenants may not take as much care around your property as your would yourself, accidents can and all to frequently do happen.

Repairing this type of damage is possible source of expense you may be able to avoid if you have building insurance for landlords cover in place.

It’s your property but not your home

It may also be worth bearing in mind that however tempted you may be to try and economise on landlords insurance by using a homeowner’s building and contents insurance policy, this may turn out to be a false economy.

In the event that you had to make a claim, you may find that your policy was simply invalid. In addition, you may also find it extremely difficult to buy insurance in the future.

Buildings insurance for landlords may typically provide the right mix of cover essential to give you peace of mind protection for your assets and your livelihood. It may not be sensible to risk trying to do without it.

Relying on luck

If we were being honest with ourselves, perhaps many of us would admit that we’ve sometimes skimped on one form of insurance or another to try and save money.

Yet as a landlord, your property is your business. Not protecting it may not only put at risk a major asset but also your income.

It is true that a buy to let property or any other form of rental building is not necessarily more at risk than others in some respects but it may suffer from risks of a type that are not applicable to an owner-occupied property.

So, for example, an owner-occupier is typically exceptionally unlikely to go out of their way to deliberately damage their own property. This may not be the case with some tenants.

It’s also the case that a rental property may stand empty more frequently than other types of residential property – if you’re waiting for new tenants or carrying out renovations for example and unoccupied properties are more exposed to a whole variety of risks than those with people living in them.

That’s why as a landlord you are really faced with only two options – relying on luck alone or purchasing a policy providing buildings insurance for landlords.

Other considerations

Your rental property isn’t only at risk in terms of its bricks and mortar. It may have contents, fixtures and fittings. All these are also typically at risk from the usual variety of causes plus those that arise from having tenants in your property.

That’s why some buildings insurance for landlords also typically includes protection in these areas and therefore is effectively a building and contents insurance policy.

It’s also perhaps worth keeping in mind that the typical owner-occupier buildings and contents insurance will not provide you with cover for rental properties. Although it may be tempting to try and save some relatively small amounts of money by using owner-occupier buildings and contents policies, in a crisis and claim situation such policies may prove to be completely invalid.

Building and contents insurance quote for landlords

There are specialist providers of this type of buy to let insurance policy. Having the right buildings insurance for landlords cover in place may provide you with the confidence that your business interests are protected

Buy to let cover

Regarding the structure of the building, most insurers typically cover all or some of the following risks, though do note that policy features and benefits can vary depending on the let property insurance provider:

• damage from storms;
• fire;
• damage from vandalism; and
• flood damage.

Some insurers may also cover other risks, like accidental damage and damage caused by tenants (malicious or otherwise). If these benefits are offered by the insurer then these risks can sometimes be covered as optional extras, for which an additional charge can be made.

Loss of rental income due to an insured risk

Should the worst happen and you find that your property is damaged by an insured risk, you might also suffer from a loss of rent. For instance, if your buy to let property is partially destroyed due to a fire, your tenants will have to find alternative accommodation and you will lose your income from the property.
In these circumstances some buy to let home insurance policies may typically cover this lost rent, up to set limits.

On the other hand, loss of rent arising from tenants’ default or disappearing without notice will rarely be included in buildings insurance for landlords.

The price

When you have gathered some quotes, is there a way to reduce the price of the policies that insurers have offered you? It is always worth asking if an insurer offers the following:

• no claims discount related to previous policies;
• a competitive price for combining together the insurance for your other buy to let properties into a single portfolio policy;
• a discount for fitting the latest security features like window locks and burglar alarms; or
• a lower price for having a higher excess (the excess is the first part of a claim that you are liable for)..

If the prices and the cover offered by several buildings insurance for landlords policies are more or less the same, differentiate on the basis of the level of service an insurer offers. Are they easily contactable via the telephone, for example? Remember that professionalism and efficiency may be worth a lot when you need to ring an insurer in a crisis!

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.

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.