If you own a buy-to-let property it’s important to look after your investment by insuring its buildings and contents. There are extra risks involved when tenants are involved, which means you should be taking out insurance specifically designed for landlords.
If the property you’re letting was your home, it’s essential you tell your current insurer you are doing so or your policy could be null and void. Your insurer may be happy with this change, although it may require that tenants meet specific criteria.
Special features of these policies include extra cover for owners’ liability and loss of rent should damage to the property mean it is empty for an extended period and different levels of contents cover for furnished or unfurnished properties. However, there may be restrictions on letting the property to DSS tenants, students or asylum seekers.
Neither buildings nor contents insurance is legally required but you will have to take out buildings cover if you bought the property with a mortgage.
This covers the structure of any buildings included in it and any fixed items that would normally be left behind when residents move out, such as perimeter walls, patios and fixtures and fittings, against damage caused by perils such as fire, flood and pipes bursting.
What you insure is the rebuild cost – the cost of rebuilding the property if it is completely destroyed – not the market value. This sum is included on your original valuation. This figure should be adjusted each year to take account of inflation.
Buying contents cover is recommended as your tenants’ deposits may not be sufficient to pay for any damage that occurs to items such as floor coverings, curtains and any electrical appliances and furnishings you have supplied.
Your tenants should take out their own insurance for their belongings.
Commercial Property Owners Insurance
Your protection needs will depend on your property’s location and the type of work your tenants are engaged in.
As a landlord, you will be required to obtain insurance for certain risks. These risks are usually specified in the lease between you and your tenant. This may also be a stipulation made by your mortgage lender. These risks are normally:
- Buildings Insurance
- Property Owners Liability Insurance
- Loss of Rent in the event of damage or destruction to the buildings due to one the insured perils.
With shops and offices it is often a requirement that tenants cover plate glass, a risk which is often included in their shop owners or business risks policies.