You’ve taken ownership of a property you intend to let, you’ve made sure that any mortgage lender knows the use to which it is going to be put and you have made sure that the accommodation complies with a whole raft of rules and regulations relating to its safety for tenants to occupy.
But there remains one vitally important consideration to be taken to heart by any potential landlord – one who has set out with the specific intention of running a buy to let business or one who has become an “accidental” landlord almost by chance.
That vital safeguard is let property insurance – defending the structure and fabric of the building and the contents you own against damage or complete loss, protecting you against possible claims of negligence from tenants or their visitors who are injured on the property, and providing the security of compensation for lost rental income if one of those insured events leaves the property temporarily unlettable.
Top tips on choosing the insurance
So here are some top tips on choosing that all-important insurance:
- standard home insurance is simply inappropriate, and if you rely upon this kind of cover, you might be faced by a nasty surprise if and when you need to make a claim;
- insurers need to know how your property is being used, and if it is let to tenants, you need specialist landlord or let property insurance;
- because it is a specialist type of insurance and because the stakes are potentially high in getting it wrong, you might want to make sure that you consult an expert provider, experienced in arranging landlord insurance;
- even in the niche market of buy to let insurance, not all policies are the same and the specialist insurer may help you decide just what level of cover you need;
- it might be taken as given, of course, that the total building sum insured is sufficient to cover the reconstruction of the property if it is destroyed in a major incident;
- but take a close look at exactly what risks are covered – not all landlord policies cover the risk of subsidence, for instance, and some might limit the degree of cover if the property lies in an area known to be at risk from flooding;
- you might also want to check whether the policy you choose offers cover against malicious damage by your tenants – some policies do, but many do not;
- make sure, too, that you have adequate public liability cover, since claims from tenants who suffer an injury blaming your negligence as the landlord may assume substantial proportions – typically, a minimum of £1 million indemnity is included in many landlord insurance policies;
- check, too, that your policy provides compensation for any loss of rental income if your property is left temporarily uninhabitable following a major insured incident – there is typically a maximum sum that may be claimed and this might be expressed as a percentage of the total sum insured under the policy.
Any way you look at it, let property insurance is a vital safeguard for protecting not only the bricks and mortar of your investment, but the continued viability of your very buy to let business.