As any landlord will verify, there can be difficulties with any tenant when it comes to renting out your property. Even if you’ve tried to ensure you let your property only to a highly-respectable tenant, accidents happen and it pays to expect the unexpected!
This is why it’s important to ensure you have the correct level of landlord insurance in place, should any problems arise. Signing up for the relevant policy is an absolute must if you’re a buy-to-let landlord, as your property is your biggest and most expensive asset.
A rental property is an investment that can provide some, or all, of a landlord’s income. Normal homeowner insurance doesn’t provide cover for the specific set of risks in the rental sector, whether they’re related to the tenant, or to external events.
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What does the insurance cover?
Landlord insurance should cover the building itself, while the bathroom, fitted kitchen, any built-in units, doors and skirting boards should be insured under the “fittings and fixtures” category. It can also include some floor coverings, such as tiles, carpets and vinyl floor surfaces. The insurance policy should pay out in the event of theft, fire, flood, a water leak, or any accidental damage by the tenants if you have had this cover included as part of your policy.
For example, insuring your bathroom against any damage is important, since the average bathroom suite can cost around £1,000 to replace – it’s one of the most expensive items to replace. Today’s insurers are continually evolving their landlord insurance products to meet customer needs.
While some landlords may feel the cost of comprehensive cover is too high in comparison with the financial loss suffered should the tenants stop paying rent, for example, it’s a false economy not to take out the appropriate policy.
Should there be an issue with tenants, it can take months to evict them and it will involve court action. The withdrawal of the landlord’s right to “no-fault” evictions in recent years means that it’s more difficult (if not impossible) to evict tenants, even in the event of their non-payment.
Should the situation escalate, and the landlord isn’t receiving payment, yet still has the mortgage to pay, insurance cover against the loss of rent could be the difference between keeping afloat or going under.
Modern policies will cover just about everything and it’s important to read the small print, so you understand exactly what you’ve signed up for. It can seem complicated on the surface, but it’s absolutely crucial to your financial stability.
Are there different types of insurance?
At the very least, landlords must take out buildings insurance and fittings and fixtures insurance to cover any potential financial loss. They can also take out contents insurance if they rent out a furnished or part-furnished property.
Tenants can take out their own contents insurance cover if they have their own furniture or other items at the property, as the landlord isn’t responsible for them. Landlords’ contents insurance will cover items they have provided such as beds, sofas, carpets and televisions.
Landlord insurance will also provide rent protection cover if required, should the tenants fail to pay. The landlord’s fixtures and fittings insurance is aimed mainly at leasehold landlords, who require additional cover for their internal permanent fixtures that aren’t covered by the buildings insurance.
This cover for landlords of leasehold properties enables them to further protect their investment in the case of items like fitted kitchens and bathroom suites, which won’t be covered under the freehold buildings policy.
It may come as a surprise to learn that landlords’ insurance isn’t compulsory. However, some lenders make it a requirement of their buy-to-let mortgages. Experts advise that ideally, insurance is what landlords rely on as a last resort if everything goes wrong. When you have the relevant insurance policy, it can turn a disaster into merely an annoyance, so it’s important every landlord has the correct cover.
If you’re a landlord with properties to let, Furniture Pack Solutions can help with our range of high-quality buy-to-let furniture – we cater for both student and professional accommodation. To find out more about our furniture packages, contact us today.