Do I need landlord insurance?

All buy-to-let properties need to be covered by specialist landlord insurance. A normal home insurance policy will not provide the appropriate cover for a buy-to-let property and will not protect against the risks most appropriate to meet a landlords needs. In the event of a claim, an insurance company will refuse to pay out on a home insurance policy if the property is rented out to a third party. This could cost you a lot of money in order to carry out the repairs yourself so it is vital to get the correct cover for your property type.

Important considerations when finding the right landlords insurance.

1. Don't under-insure your property. Although you may get a cheaper premium, your insurance company will only pay out up to the insured amount. Therefore if your property was to need complete rebuilding, for example in the case of a fire, you would not receive a big enough payment to be able to do this. The savings you make on the premium would not be worth it if you had to pay out thousands of pounds to rebuild your property.

2. Check your excesses. If you want to get the cheapest premium possible you may want to increase the amount of excess you pay. This means you are less likely to make small claims and your insurance company will see your property as less of a risk.

What does landlord insurance cover?

Landlord insurance covers two main elements. The first being the building which includes everything that cannot be removed from the property such as floors and carpets, walls, curtains and fixtures and fittings such as fitted kitchens and bathrooms.

The second element is the contents which includes everything which can be removed from the property such as the furniture. This is often covered on a "new for old" basis. Obviously all insurance companies offer different levels of cover so it is worth a look through the policy documents to check exactly what will be covered in the event of a claim.

Often an insurance policy will not cover malicious damage caused by the tenants which is why it is vital to have a tenancy agreement and a tenancy deposit.

How much should I insure my buy-to-let property for?

It is important to state the correct building sum insured to avoid under or over insuring a property. It is also worth noting that this is not the same as the market value. There are various online websites which can calculate a rough estimate of the buildings sum insured based on the size and square footage of the property, however the only way to get an accurate value of your property's rebuild value is to get a professional survey done which can prove to be quite expensive.

If you do not know the building sum to be insured you can sometimes get blanket cover. This means the building sum insured will be a set amount (usually £500,000) and if you need to make a claim they will pay out the amount you need to rebuild the property and not the total amount.

Where shall I get landlord insurance cover?

There is a large market of insurance brokers offering buy-to-let insurance with different levels of coverage at different premiums. Browsing the internet you will find hundreds of companies offering different products. It is important to shop around in order to get the best premium and the cover specific to your buy-to-let property.

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