Landlord Insurance
The last few years have seen a major rise in the amount of buy to let properties in the UK, and the signs are that this is set to be a long term trend. While there are opportunities for long term capital gains, not to mention rental income to assist with mortgage repayments, there are a number of issues which landlords need to address. There are added risks renting out properties to third parties, both for the third party and the home owner. As the market has increased in size, there are now a number of specific landlord related insurance products on the market to assist with long term protection.
These insurance polices offer protection against a number of events and actions, which include :
General Property Insurance
This is your standard home insurance in the event of flood, fire, etc and ensures that the owner will be reimbursed in the event of the property being damaged, either materially or beyond repair. This is vital for any property investor, as any damage to a property can be very expensive to repair, and would likely restrict the income from the property in the short term.
Many polices will also take into account certain costs associated with re-housing a tenant in the event that the property is uninhabitable for a period of time. It must be noted that tenants do have rights under their rental agreements, and these need to be respected.
There is also the traditional contents insurance, covering items within the property.
Property Owners Liability
In the event of an accident around the home involving the tenant, it is essential that the landlord is covered in case they are apportioned any blame. When you bear in mind that we have seen accidents with gas, fires, etc, the potential liabilities could be significant.
Employers Liability
This element of a landlord insurance policy relates to potential accidents in and around the property, which may involve a cleaner, gardener, etc. In essence the owner is running a business, and the insurance required is very similar to that of a more traditional business.
Conclusion
Many people fall into the trap of believing that renting out a property is not the same as a traditional business, when in fact it is very very similar. It is essential that landlords cover themselves for all eventualities as the risks are large, and the liabilities could be potential enormous.
It is also vital that they are up front and honest with their insurance company, as any misinformation on an application form may well see a policy invalidated in the event of a claim - leaving the landlord wide open to potentially large costs.
