A Simple Way to Protect Your Business and Your Investment: Landlord’s Insurance

Being a landlord is perhaps not as easy as is sometimes made out. There are actually quite a few things that can go wrong with your property business (or hobby!). These range from the catastrophic (e.g. a property that you own being destroyed in a fire or flood) to the more mundane (e.g. tenants not paying their rent in time). It is obviously not possible to totally avoid risks like these. It is possible however to cushion yourself against them (and several other kinds of risks not mentioned above) by taking out adequate landlord’s insurance.

Very few new landlords (and sadly even some established ones as well!) realise that there are insurance products available that cater specifically for landlords. This means that they often try to put together a ‘do-it-yourself’ insurance portfolio (covering different aspects of their business) as best as they can. The unfortunate result of this is that many landlords are underinsured or have significant ‘holes’ in their cover. This is totally unnecessary!

The growth of buy-to-let investments over the past few decades was met by the insurance industry with the development of a vast array of packages aimed specifically at the needs of landlords. The details of the different policies that are available obviously vary a great deal. In general however landlord policies will normally cover the following contingencies:

• Loss of, or damage to, buildings and/or contents
• The provision of an alternative place to stay for tenants following damage to an insured property.
• Cover for the loss of income (usually for a period of up to 12 months) in case of damage to a property.
• Liability cover. This offers protection from possible claims by tenants and/or by contractors working on a property on your behalf.
• Cover for unoccupied properties (e.g. when a property is ‘between tenants’)
• Some policies include cover against the loss of income arising from eviction proceedings due to non-payment by tenants. In such cases the policy will normally pay out a specific amount for the time it takes to recover possession of the property.

The above list should make it clear that landlord insurance has the potential to protect you against some of the most common types of adverse event that could potentially threaten the health of your property business. Getting sufficient cover should therefore be quite high on the ‘to-do list’ of landlords. Some of the things that should be kept in mind when selecting a policy are:

• Premiums for exactly the same cover can vary quite significantly between different insurance companies. It is therefore important to ‘shop around’ in order to get the best possible deal.
• Even though price is an important consideration it is certainly not the only thing to keep in mind when choosing a policy. Things like the reputation and strength of the insurance company and possible exclusions can also have a bearing on which policy to choose.
• When choosing insurance it is always important to try your best to strike the perfect balance between being adequately covered and paying for levels of cover (or services) that you do not need.
• Landlord insurance policies can sometimes be quite complex and it could therefore sometimes be necessary to submit a policy document to a legal professional in order to make sure that you will be sufficiently covered if you take out a particular policy.

Most people do not like paying for insurance as it deals with heavily with “what if’s” the fact is however that having proper insurance in place can often mean the difference between succeeding as a landlord or leaving the field early due to an inability to move through unexpected difficult circumstances.

Summary:

• Landlord’s Insurance can provide cover against some of the most common contingencies faced by landlords
• Cover can range from major incidents (e.g. fire or flood) to something as ‘mundane’ as tenants not meeting their payments
• It is very important to shop around in order to get the best possible cover at the best possible price
• Complex landlord policies should ideally be checked by a legal professional