Published 1 March 2019

House insurance webWe are all familiar with home insurance – for homeowners, taking out buildings and contents cover is second nature, and most tenants will at the very least cover their own possessions with a contents policy.

However, standard home insurance doesn’t cut it when it comes to letting out a property, and getting it wrong can be a costly mistake.  Fortunately, obtaining the right cover is not complicated, but it is something which needs a little effort and careful attention.

Buildings cover is the most basic insurance, and one which any homeowner will be familiar with.  But a standard policy won’t cover you for things like providing temporary accommodation for your tenants if your property is rendered uninhabitable (by a fire or storm, for example), so a specialist landlord policy is needed.

Many landlords think they don’t need contents cover if they are renting out their property unfurnished, assuming that the tenant will do this, but that means that things like carpets and curtains may end up not being insured – your buildings policy will only cover the fabric of the building, not the fixtures and fittings.

Next up is legal expenses cover.  Some landlords don’t bother with this, in order to save a few pounds on the premium, but that saving can end up being very costly indeed.  If you need to go to court to take possession of your property (if the tenant is in rent arrears, for instance), the legal bills can soon rack up into the thousands.  Legal expenses cover, therefore, is something that we would recommend every landlord take out.  The peace of mind is worth far more than the insurance’s relatively modest cost.

Rent protection insurance is increasingly popular in these uncertain times, providing cover against possible rent arrears, and even void periods.  Proper vetting of tenants, especially when carried out by a professional letting agent, can minimize the risk of such problems, but the fact is that anyone can fall on hard times and not be able to pay the rent.  If you are buying your rental property with a mortgage, this is particularly important, as you will have to make the repayments even if no rent is coming in.

In every case, it is vital to inform your insurer that you are letting your property.  If you have not done this, you may find that when you come to claim, they will refuse to pay, once again leaving you with big bills.

One final tip: the insurance market is really competitive, so it is certainly worth spending some time shopping around for the best deal.  This might be in the form of an all-inclusive specialist landlords policy, or it may make sense to build up your cover from different insurers.  But whatever you do, make sure you have the right cover – this is one area where it’s not worth taking the risk.

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