For many landlords, letting out a property and receiving monthly rent may be your sole income. So, it makes sense to protect any investment by taking out insurance for the essentials, such as Buildings cover, so that you are insured against your property being damaged by a storm, flooding etc.
Then there is insurance for Contents (if those buy to let properties are indeed furnished). Having said that, Contents insurance isn’t essential (i.e. it’s not necessary by law). But it does make sense since furniture and fabric can easily get torn, spills can occur regularly on carpets and other forms of flooring, and white good appliances are pretty easy to break these days. And if your tenants happen to be under-graduate students, or you run a HMO, then we would definitely advise having Contents insurance.
There are other forms of insurance though, which are well worth considering from a business perspective. One of the main forms of non-essential insurance is Rent Guarantee cover.
Rent guarantee.
Having this type of insurance means the landlord can breathe a sigh of relief knowing that he or she will always receive the same rental income every month – regardless of whether there is a tenant in the property or not. Some insurance companies refer to this as Void cover, because it means that if a tenant has left and the landlord hasn’t been able to find a new tenant (i.e. the flat is empty), then they will still receive the same rental income – only this time it will be the insurance company, rather than the tenant who is paying. There is often a stipulation that Rent Guarantee cover will be over a particular time scale e.g., a few months, six months, perhaps even a year. Of course, the longer the period the cover is for, the more expensive the insurance premiums will be.
Landlord liability.
Another good insurance cover to have, considering we appear to be living in an increasingly litigious society, even here in the UK. This type of insurance covers the landlord if a tenant – or one of their visitors – is hurt or injured due to a problem with the flat. This could be a broken tile or floorboard where the tenant cuts their hand or trips and falls, requiring later hospital treatment and perhaps being unable to work for several months. More seriously, it could be a piece of fallen masonry causing a serious head injury, or a poorly-wired fuse box, resulting in a fire and smoke inhalation. The insurance will cover the landlord for damages and legal fees if a claim is pursued and the matter goes to court.
Accidental damage.
If a tenant breaks a window in your property without meaning to, or if a bed needs replacing because a tenant or their visitor jumped on it, then you would be able to claim for the item under this type of cover.
Cannabis cover.
Yes, really! It’s not as bizarre – or uncommon – as it sounds, especially if you rent to students. Some insurance firms will offer this due to the amount of damage a cannabis production factory can do to the structure of a building.
Terrorism cover.
If your buy to let is actually a block of flats and it’s situated in London, Manchester, Liverpool, Glasgow – or some other major UK city, then it’s possible to get this cover against a bomb attack, as a result of recent attempts.
Author
Chris Kirkwood
