I recently bought a property I intend to let out to tenants – do I need buy to let insurance?
Apart from any exceptions mentioned in the next FAQ, you have no legal obligation to have buy to let insurance – or landlord insurance, as it might be more commonly known. Its absence, however, is likely to leave your let property at considerable risk of loss or damage and, without insurance these are losses you need to find from your own pocket.
Are there any exceptions?
If there is a mortgage on your buy to let property, the lender is almost certain to insist that adequate building insurance remains in place at all times (to safeguard the mortgage lender’s security on your loan).
And while not landlord insurance per se, if you employ someone in any capacity to help run your buy to let business, the law requires (with a very few exceptions) that you hold a minimum of £5 million employers’ liability insurance – to ensure you are able to meet possible claims from current or former employees who have been injured or who have contracted a medical condition because of their work for you.
What does landlord insurance cover?
Just as there are many kinds of let property, so there are many variations of landlord insurance.
Most, however, share in common protection against some or all the following categories of risk:
- just as the name suggests, this protects the structure and fabric of the property against such potentially major risks as fire, storm damage, escape of water, flooding, impacts, vandalism and theft;
- this self-explanatory element of insurance protects the contents which you own within the let property – your tenants, of course, remain responsible for insuring their own possessions;
Public liability insurance
- this is a very important element of cover, shared by most landlord insurance policies and indemnifies you against claims that you have been negligent in your duty of care and that, as a direct result, a tenant, one of their visitors, a passerby or any other member of the public has been injured or had their own property damaged; and
Compensation for loss of rental income
- on the principle that your let property is a critical business asset, landlord insurance policies typically provide compensation for loss of rental income following a major insured event which renders the accommodation temporarily uninhabitable.
Doesn’t my regular home insurance cover these risks?
The Consumers’ Association’s Which? magazine warns that home insurance does not cover the risks you face as a landlord.
Indeed, if you make a claim on your home insurance, yet the property is in fact occupied by tenants, you are likely to be met by the unwelcome response that your claim is invalid.
The use to which any premises are put is a critical consideration when it comes to any type of property insurance, so if you have a buy to let property, be sure to arrange purpose-designed landlord insurance – which recognises the distinction between a home used by its owner occupier and one in which tenants are living.