Many people find themselves in the position of becoming a landlord, sometimes quite accidentally. Perhaps they have met someone and move in with them, leaving their own property vacant, or perhaps they have been relocated with their job. Whatever the reason, these so-called accidental landlords are at the greatest risk of finding themselves in hot water with their insurer, wrongly assuming they can carry on with their existing buildings and home insurance policies.
Here are a few reasons why considering landlord insurance is very important:
Standard insurance policies assume you are living in the property. If something happens, and your insurer finds out you’re are not living there, it can result in a rejected claim.
Non-payment of rent
Landlord insurance can protect you from unpaid rent. Even if you have taken great care to fully reference your tenants, sometimes circumstances mean they cannot pay you. If you have a mortgage to pay, this can end up being disastrous – especially if it takes a few months to evict them.
Damage to your property (by the tenant)
As a landlord you are likely to have taken a decent deposit before renting out your property. But sometimes that is not enough. There are times when tenants can cause a huge amount of damage to a property, and the cost to repair that damage far exceeds the deposit you hold.
Cover for loss of earnings/rehousing costs if the tenants have to move out (following an insured event)
If there is a problem with the property that is outside the control of the tenant, such as subsidence, you may be liable for finding them suitable alternative accommodation. You may also be out of pocket if they are not paying rent while the problem is being sorted.
Liability for accidents in your property causing injury
If there is something in your property that causes injury, or even death, it’s important you are insured to cover your liability.
Damage to contents
If your property is unfurnished, you'll need to consider cover for white goods, carpets, curtains and blinds. If your rental property is furnished, you'll need to think about cover for furniture, electrical items, pictures and ornaments, too. You don’t need to insure your tenants' possessions though - that's their responsibility.
Michael Ward, Managing Director of PayingTooMuch.com said “If you are a landlord, it’s really important to fully understand your insurance cover. A standard home policy is unlikely to be sufficient and could leave you very exposed. Many insurers will offer discounts if you buy building and contents insurance together, as well as special deals on insurance for multiple rental properties. Being a landlord is like running a business, so please remember to approach it as such.”