Buy-to-let properties are large investments, in which you most likely have a considerable amount of money tied up. Much of this is quite likely to be in the form of a loan – hence the term buy-to-let. Both your investment and your borrowing needs protecting from the unexpected.
Lee Sparrow, from H&H Insurance Brokers, says: “It certainly doesn’t make sense not to be covered by insurance. You could stand to lose your entire investment by an accidental fire. Not to mention, you’ll still be liable to pay the mortgage – it won’t disappear, even if your buy-to-let is reduced to ashes.”
Here are some of Lee’s key points to consider:
Do I legally need landlord insurance to let out my property?
No – building insurance is not legally compulsory, but nobody else will insure your property – certainly not your tenants, so it’s not worth going without it. Ask yourself whether you’d be prepared to have your own home uninsured, if you still doubt its worth it.
Enter the Public!
It’s not simply the bricks and mortar that need to be covered. Any injuries to people in the building, falling downstairs maybe, or in the garden, are likely to be a problem you are responsible for – so a second important part of landlord insurance is the public liability schedule. If injuries occur, you will be insured. This is particularly crucial for landlords that have tenants in their property, as you might expect.
Since the UK is becoming ever more litigious, every landlord should have public liability insurance to cover themselves. Tenants are becoming much more savvy about getting ‘no win, no fee’ solicitors involved! It’s worth checking to see if your policy covers public liability.
What will Landlord Building Insurance Cover?
Your policy should cover your property from any damage, which may include fire, vandalism or malicious damage, natural disasters, and subsidence. However, there are literally hundreds of policies available on the market, and new ones are being introduced every day, so it’s important to use “due diligence” when choosing the best policy to suit your needs.
Is there a difference between ‘Home Insurance’ and ‘Landlord Insurance’?
You might think that policies that do the same job would be broadly the same, and that you can opt for a domestic policy, which could be cheaper. Sadly, there is a difference, and it’s crucial to get “Landlord Insurance” if you’re letting your property.
Landlord insurance can be slightly more costly than regular home insurance, so a lot of landlords opt for “home insurance”, assuming they’ll still be covered but at a lower rate. It’s a common mistake and it can cost you in the long run.
In most cases, “Home Insurance” polices will NOT cover any claims made in rented out or buy-to-let property. In fact, the insurance policy will most likely be invalid. Home Insurance covers an individual’s residential home. Landlord Insurance covers rented out properties.
Is there a difference between ‘Landlord Insurance’ and ‘Buy-To-Let Insurance’?
You may think there is a difference between Landlord Insurance and Buy-to-Let insurance – but they are actually the same thing. No matter which you ask for (either Buy-to-Let or Landlord Insurance) you will be given the same quote and it will be to protect the building that you rent out – and cover the people who injure themselves, too.
So to conclude Lee says: “A New Year’s resolution should be to ensure you have protected your property against disaster. It is just possible that in the excitement of becoming a landlord, you forgot to get the cover you really need, so double check.”
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