If you’re renting out property in Brighton and Hove, insurance is one of the costs you’ll need to factor in. The first thing to remember about commercial landlord insurance policies is that you’ll need a bespoke product – standard home insurance won’t cover you for renting out property. You will also need the correct cover if you take out a buy-to-let mortgage. Read on for more about the different types of landlord insurance.
A landlord insurance policy isn’t a legal requirement, but a standard home insurance policy won’t cover the unique risks of renting out an investment property. Consider damage, household disasters such as burst pipes, and the new challenge of protecting your rental income. Don’t forget the public liability insurance landlords should consider – if tenants have an accident, the property owner’s liability cover could prove invaluable.
You may not have a choice. Many mortgage providers make landlord cover a requirement for buy-to-lets.
You don’t need a landlord insurance policy to host a lodger in your shared living space. But you’re a landlord if you have a tenancy agreement and can’t enter their room. If you rent out your holiday home for profit, ensure your landlord cover is suitable for short-term lets.
Like any other insurance product, landlord insurance cover protects you and your property from risks associated with letting it to tenants. Some insurance companies may offer cover-all packages, or you can take out separate policies to cover your needs. The main types of landlord insurance are:
As with a domestic policy, landlord buildings insurance covers repairing or rebuilding your property if the structure is damaged or destroyed.
The amount of buildings insurance landlords need will depend on an estimate of the cost of rebuilding your rental property from scratch, including labour and materials.
Your policy will usually include cover against damage to the structure of your property caused by:
Before taking out a mortgage, you will need proof of a landlord buildings insurance policy. A regular home insurance policy won’t do.
If your rental property is a flat, be careful to take out buy-to-let insurance that covers you for damage caused by other units in the block.
If you rent out your property as furnished, you will need contents cover to protect the items of furniture you have provided. Even if you rent the place unfurnished, there is contents insurance landlords should consider, covering the fixtures and fittings, carpets and appliances in the property. You are not required to insure your tenants’ possessions. That is their responsibility.
Insure your contents for the money it would cost to replace everything you have provided in your rental property.
Rent guarantee insurance, also called rent protection insurance, is a type of landlord insurance policy offering protection if the tenant refuses or fails to pay their monthly rent for various reasons, including sickness or redundancy.
You never know when a tenant’s circumstances may change, leaving them unable to pay the rent and falling into arrears. Although you can start taking steps to end the tenancy, this doesn’t replace the missing rent or pay your bills.
In the current economic climate, with rising inflation and a looming recession, many landlords are seeing increased rent default rates. Rent guarantee insurance can provide essential cover and peace of mind against these unforeseen circumstances and help you to cover your expenditures.
The amount of money you receive will depend on how long you are without rental income, but most policies will cover the rent for between 6-12 months. Some policies will also cover you for any legal expenses for disputes concerning the recovery of debt and the process of repossession or eviction.
During the coronavirus pandemic, many insurers stopped offering this type of insurance due to increased tenants struggling to pay, but some products have returned to the market.
Always check the conditions around when the policy will pay out carefully.
This a slightly different type of cover and is easily mixed up with rent guarantee insurance as they both compensate you for the loss of rent.
The difference between these two policies is that they cover separate scenarios under which you lose your rental income. Whilst Rent Guarantee covers you when your tenants fail to pay, this alternative covers you in case your tenants move out due to the property suddenly becoming uninhabitable because of a flood, fire, water leak or storm damage etc.
Although these events are insurable for the damage to the property, it doesn’t cover your loss of monthly rent due to having an unoccupied property. Check if your policy covers alternative accommodation if tenants can’t comfortably live in a property until the problem is remedied. This type of insurance policy is useful if you rely on the rent to meet your mortgage repayments or for your income.
Depending on your circumstances, you may wish to consider both types of policies.
Landlord liability insurance or property owner’s liability cover can usually be added to your policy. Landlord liability insurance covers you if your tenant tries to sue you for an accident on the premises. For example, if they or a guest are injured by faulty wiring or trip over a broken tile.
Your tenant could also claim compensation if their possessions are damaged at the property. The property owner’s liability insurance can cover this. Damage claims can be costly, so landlords’ liability insurance offers valuable protection.
You can also take out cover for any legal expenses you might incur if you take your tenant to court or are involved in a dispute.
Home emergency policies protect you and your tenants against everything from blocked drains to rodent infestations, lost keys and electrical issues, depending on your chosen cover. Boiler cover often comes at an additional cost. Check if it’s included in your insurance quote. Policies usually give you 24-hour access to qualified engineers. Emergency cover is most useful if you don’t employ a managing agent with their own tradespeople or if you live some distance from the property.
Accidental damage insurance helps to cover the cost of repairing or replacing fixtures, fittings and furnishings after mishaps. For example, holes in the walls, cracked windows or broken furniture. But it doesn’t cover wear and tear or faulty repairs by contractors you have engaged.
This will depend on the property type, the location, the number of tenants, and the level of cover you want. It will also depend on other factors, such as the level of excess you are prepared to have.
As with all types of insurance, it’s essential to compare quotes from different companies and use a comparison site, but don’t go by price alone. Basic policies, without add-ons – and with a bigger excess – will be cheaper, but check that each insurance quote offers adequate coverage for your needs.
You may also be able to reduce your insurance premium by adding security features to the property and ensuring it’s in a good state of repair.
Ensure the insurer you choose is adequately authorised and regulated by the Financial Conduct Authority.
Have the following information to hand when getting a landlord insurance cover quote:
If you have questions about renting out property in Brighton and Hove, we’d be happy to help. Contact us today to discuss our services for landlords.
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