What is Landlord Insurance?
Landlord Insurance could be explained as home Insurance tailored to a buy to let investor or any landlord letting their property.
The most basic landlord insurance usually consists of a landlord buildings insurance and landlord liability insurance.
Buildings insurance normally represent cover in an instance of natural disaster, fire,
subsidence, vandalism or other deliberate damage.
Landlord liability insurance protects you in case of a claim against you due to injury or a damage to the tenant or a visitor.
When is Landlord insurance necessary?
- When it is a requirement on your mortgage arrangement , often buy to let lenders make it mandatory
- When it is part of your tenancy agreement
Legally you are not obliged to have a landlord insurance. It is entirely up to you to decide if you take the risk or the cover, unless your mortgage broker requires otherwise.
7 Important Points when considering landlord insurance
1. Switching from Home to Landlord Insurance
Some home insurance policies become invalid by renting the property as the risks are considered to be higher for rented accommodation.
2. HMO Insurance
HMO landlord insurance is specifically designed for properties with multiple occupation. If you run a HMO business or Airbnb this is tailored to your needs.
You can usually insure multiple properties in one policy. Loss of rent and alternative accommodation cover should be included.
3 . The rental arrears statistics
Approximately 9% of tenants In private renting sector end up in rental arrears (Lettingaproperty.com, 2017). Evicting a tenant takes on average 42 weeks.
4. The household injury research
RoSPA ( Royal Society for the Prevention of accidents) reported in 2019 that 6000 people die yearly due injury at home in the UK and 2.7 million end up in their local A&E unit. Children under 5 and elderly people over 65 are more likely to be affected. While elderly citizens are less likely to belong to the tenant category, families with young children do.
5. The Tenant
The majority of tenants in private sector are between the age of 25- 50. These are the most active years for persuading a career but also for nesting and procreation. A significant number of tenants are so families with dependent children or separated parents with shared custody of their offsprings.
This category of tenants are in theory a higher risk group when it comes to potential home injury.
6. The Property location
Naturally, the higher risk of flooding or higher crime rates relevant to your asset location may prompt you to get a reassuring cover. Such factors will be be reflected in the insurance cost.
7. The Policy Specifics and its Cost
Choosing the type of cover and customising the policy depend on your needs, type of accommodation you provide and property specifics. There is numerous extras available across insurance providers for additional fees. Researching what may potentially invalidate your cover should be part of the decision making process. In some circumstances tenants themselves may invalidate your landlord insurance.
Which landlords in particular should consider landlord insurance?
Further from the above listed points it appears that certain set ups and certain tenant
categories represent higher risk to getting injured at home.
You are at slightly higher risk If you own a property which:
- Has stairs
- Has lofts which tenants have access to
- Has a garden
- Is built on a riverside, near water streams or sea
- Is built in an area with higher levels of criminal activity
- Has rugs in use
- You are also at higher risk if your tenant is a family with dependent children, or if you have a tenant with special needs such as use of wheelchair, ect
- HMO settings
What are most common household injuries in the UK?
Falls, trips and falling objects are according to multiple sources very common household injuries.
Falling from stairs, tripping on rugs, mats or uneven thresholds can cause a significant injury.
Falling objects are often endangering children but in some cases also adults. Falling tree in the garden, falling items when accessing lofts ect.
7 Most Common claims in House Insurance in the UK
House Insurance and Landlord insurance are like cousins if not sisters. We have found several statistics on most common house insurance claims in the Uk in the last decade.
This is currently the closest insight of what claims may be landlords needing to make against their landlord insurance policies.
Water damage appears to be the most common reason for a home insurance claim in the 2017 and 2018.
- Water damage up to 30% of claims
- Accidental damage approx 17% claims
- Weather damage between 12-19% claims
- Fire and explosion between 10-17%
- Theft between 12-14%
- Subsidence approx 12%
- Other approx 12%
Landlord Building Insurance
A building insurance protects the structure of the building against damage, repair and cost of re-build.
Often items secured to the structure of the building are part of the policy ( bathroom or kitchen units).
Flats and appartments as they are parts of structures of a block or development are usually already insured. The cost is then often included in the service charge.
It is very important not to undervalue the sum insured as this may invalidate or affect the cover when you are in need of a claim.
Landlord Contents Insurance
If you are letting your property furnished a Landlord contents insurance may be of your interest. This add on to your basic landlord insurance will cover your furnishings and appliances against theft or damage. A landlord contents insurance usually covers also carpets and curtains.
The tenants contents are normally not included in the landlord contents insurance. There are options for tenants to insure their contents should they wish to do.
What is considered high risk on content insurance?
Specific valuable items may bring your insurance cost higher. If your property takes pride in any of the below listed categories you can decide if you wish them to be specified on your cover. Unspecified items may fail to be protected.
- Antique furniture or items
- Paintings, statues or any Artwork
- Rare books
- Watches and clocks
- Garden equipment
- Furs and valuable clothing
- China porcelain
- Musical instruments
- Sporting equipment
- Anything considered rare or collectable
- Electric wheelchairs/ Mobility scooters
- Items from precious metals ( e.g. golden candle stands)
- Software stored or electric devices
Landlord Insurance, yet another experience for your business. Whether you are searching for this product due to your mortgage conditions or simply for your personal sense of security you want the best deal available.
Following link will take you to a list of 12 best landlord insurance providers in 2020. BoughtByMany has achieved this list of recommendations based on multiple relevant factors such as customer feedback, levels of cover, independent review and awards won by the company.
Landlord insurance claims are as any other insurance claim supported with necessary evidence, which in many cases includes Comprehensive Check Out Report. Such report normally compares directly the state of the property at the start and the end on the tenancy. Containing photographs which are time stamped, Check Out Report represent valuable evidence in case of a claim.
Protecting your property and your business is clearly a multilayered task. We wish you the best of luck finding the golden middle path.
