Why do I need specialist landlord or buy-to-let insurance?

Landlord or buy-to-let insurance differs from a traditional home insurance policy, because the type of risk is a little different.

Essentially, as a landlord, whether you are renting out just one property, or if you have a vast portfolio, your ability to make a return on your properties (and ultimately, perhaps your ability to continue make your mortgage repayments on those properties) will depend on those properties being in a fit condition to rent.

As such, you need to protect against the financial consequences (i.e. loss in rental income) should the worst happen. With a regular home insurance policy you are not covered for loss of income, only for damage to the building and/or damage or loss of personal belongings.

An example claim which would be covered with a landlord insurance or buy-to-let insurance policy, which would not be covered with a normal home insurance policy can be seen below:

Your property suffers extensive fire damage.  Your tenants have to move out whilst the building is repaired. Not only does your landlord policy cover the cost of the repairs, it also covers the loss of rental income whilst the repairs are being carried out.

What about public liability insurance?

Similarly your landlord insurance will protect you in the event that your property causes damage to a person or object - for example, if tiles fall from your roof and damage a car parked on the street.

There are also various other types of cover which you might consider including in your policy - some examples are detailed below:

 Contents

If you are renting your property as either furnished, or part-furnished you may decide to cover these items (e.g. furniture, appliances, curtains, flooring etc) as part of your policy. You can elect to get ’standard’ cover - which would offer cover in the event of fire or theft; or elect to get ‘accidental’ cover - which would offer cover in the event of accidental damage - although it is worth noting that this is normally more expensive. Please note, if you do elect to take out contents insurance only your possessions will be covered, not your tenants. If they wish to cover their possessions they will need to take out their own contents insurance.

 Legal expenses

You can elect to cover legal expenses as part of your policy. This would offer cover in the event that your tenants refuse to pay rent and/or refuse to leave your property. In this instance you would need to go to court to collect the rent owed to you and/or have them evicted.

 Employer’s liability

If you own many properties and employ people to maintain and manage them on your behlaf then you are legally required to carry employer’s liability insurance. This can form part of your landlord insurance if you wish.

How are landlord insurance premiums calculated?

Ultimately, as with any insurance policy it really depends on the level of cover which you require. However, the following factors will also have a bearing on the premium which you pay:

1. The location, age and type of property
2. The type of tenants - e.g. if you are letting to students you may pay a higher premium than if you are letting to professionals
3. The re-build cost
4. Previous claims

Here at PropertyQuoteDirect we’re committed to ensuring you get the right cover at the right price, click here to get a great deal on your Landlord Insurance

Image credits: Jim Linwood; Posh Living LLC