Nov 28

What Does Landlord Insurance Cover?

Being a landlord, you need to ensure that you have the proper cover for your investment. The very basic insurance that every landlord must hold is landlord insurance. But, what does this insurance actually cover? For a new landlord, there will be numerous cover options that provide more than adequate protection.

Basic Cover

Depending on the policy, there will be varying cover options. The following are rather standard:

Building Insurance

In the event that your building burns down or is flooded, building insurance will be the means of recuperating your loss. Under this insurance, a building will be rebuilt or repaired as necessary to the previous state when a policy was signed.

Many insurers are providing unlimited cover or cover that spans into the millions to allow for rebuilding. This allows the policyholder to not worry about rebuild estimates.

Contents Insurance

Ideal for anyone letting furnished properties. The content within your rental will have value. If you let furnished properties, contents insurance will provide the vital cover needed to ensure your property is covered in the event of theft or damage.

A few of the most pertinent items that will be covered are:

  • Beds
  • Sofas
  • Televisions
  • Appliances
  • Carpets

If any of these items are stolen by a tenant, you’ll be able to contact your insurer and make a claim. Typically, a “new for old” basis is followed. Essentially, if your old television is stolen or damaged, the insurer will provide a new model. Since finding an old model will likely be fruitless, this allows owners peace of mind.

It must be noted that contents insurance is not provided for the tenant. The responsibility of procuring contents insurance is that of the tenant and not the landlord.

Loss of Rent

Quickly being added to most insurance policies, loss of rent cover protects landlords in the event that their building becomes damaged or destroyed. During this time, a tenant would not be providing the substantial income that the landlord would need to be able to pay their debts.

Loss of rent insurance will provide monetary relief during this time.

Landlords that do not fully own a property and have a mortgage will want to ensure that adequate loss of rent is provided. These will be monthly payments, often a percentage of the rent lost, that will be provided to the landlord. Now, instead of losing the property for lack of payment, the landlord will be able to pay their mortgage and keep their investment until it is legally able to be let again.

Liability Insurance

As a landlord, there is the potential that liability claims will be made against you. Let’s take a look at a quick example of how this works:

  • A tenant is walking in the backyard and trips over a broken pipe.
  • A lawyer alerts the tenant that the landlord should have made proper repairs.
  • The tenant sues you based on personal injury.

You’re responsible for keeping your property safe, but if you don’t know that a problem exists, you may still be sued. In this case, you would be personally liable for the claims made against you. With many cases reaching over £100,000, it’s essential that liability cover be provided.

Liability cover will reach a minimum of £2 million as a standard. This is a necessity.

Legal Expense

The perfect addition to liability insurance. Legal expenses that are accrued due to liability claims, evictions, repossessions or other legal issues dealing with a tenant will be covered. Legal expenses can be costly, and without this cover, it may be difficult to evict a tenant or acquire legal representation.

While many policies will have all of the above cover options, there will be some that do not. It’s important to discuss your landlord insurance options with an insurer prior to signing a policy. Oftentimes, you will have a lot of extra cover options that can be added to further protect your investment.

Many insurers will also offer bundle options that will have varying levels of cover added.

When working with the same insurer and insuring multiple properties, you may be able to seek a policy that covers multiple units for a low cost. This is the optimal choice when renting a block of flats.