A landlord should consider buying buy-to-let insurance or landlord insurance as soon as they are considering purchasing a property. In the event of an unfortunate event, you could be left without any insurance. It can sometimes be very difficult or expensive to insure a property. This is why it is crucial to get a local and structural survey done before you purchase the property. Inadequate insurance coverage can lead to high premiums that could negatively impact your ability to rent out the property.
Many landlords mistakenly believe that standard household insurance will continue to cover their property even if they rent it out. This is often false. Many household policies do not cover contents or buildings while the property’s being let out. It is important to ensure that you have a landlord policy, or that your existing household policy covers this.
Different insurance companies offer different levels of coverage. There are generally two options for buildings coverage and two options to cover contents. The standard coverage covers both the contents and the building.
-Fire, lightning, and explosion
-Riot civil disorder, strikes, lock-out workers, or malicious people
-Malicious damage caused by tenants
-Theft or attempted steal
-Intact by road vehicles, aircraft or animals, falling trees, branches or telegraph poles, lamp posts, pylons or pylons, or falling aerials
-Escape from oil
Escape from water
Subsidence, ground heave, or land slip
-Property owners liability PS2,000,000
Some insurance companies will offer additional coverage for no cost, such as the following:
Accidental breaking of sanitary fittings and fixed glass, solar panels, ceramic hobs, or fixed glass.
Accidental damage to underground services that extend from your home to public mains. You are legally responsible
-Loss or alternative accommodation
-Communal Contents Cover
There is also an option for accidental damage to buildings and/or contents. As the title suggests, accidental damage to buildings or contents caused by tenants will be covered. Important to know that many insurers will charge an additional fee for accidental damage coverage and not provide contents coverage. A tenant might accidentally damage a building by hitting a nail in the wall to take a photo, or accidentally damaging a pipe.
A landlord insurance policy usually covers property owners liability, as it is mentioned above. This insurance would protect you against the tenant making you liable for any injury that was caused by your property.
The policy’s excess is the amount you have to pay in order to make a claim. In exchange for a higher excess, many insurers offer discounts on premiums. If your excess was PS100, then you would be responsible for the first PS100 of any claim that you make regardless of the final settlement amount. The standard excess on a policy can vary from PS50 to PS1000, while most insurers will have a subsidence excess between PS1000 and PS1000. Your excess can be affected by the type of tenant that you have. For example, if there are several students living in a property, your excess may be higher than if it was occupied full-time.
When insuring your property, remember that you must insure it for its reinstatement value and not for the sale price. Professional structural surveys are the only way to determine the reinstatement value. These are the factors that should be considered when calculating the reinstatement value:
– The cost to restore the property to its original condition (take note of older buildings).
Clearing up the site
– Surveyor costs
– Costs of an architect
– Compliance with local and government requirements
– Miscellaneous fees
Insurers only will pay the amount of the building insured so if you fail to insure the right amount, it could lead to expensive claims and higher premiums. There are many online tools that can calculate a reinstatement value, but they are often inaccurate.
Index linking your policy means that your insurance company will increase the amount of coverage each year, based on data from the Association of British Insurers. As long as your initial reinstatement value is accurate, it should remain at a sufficient level each year. This is provided you follow your insurer’s advice.