If you own a property that is mortgaged and you rent it out, the mortgage company will probably insist on buildings insurance. This is to ensure that if the property is damaged or demolished they can recover the money they have lent you to purchase the property.
Landlords insurance is different from home insurance as it often includes extra clauses and extras. Below are some of the things you might expect to see in a specialist landlord insurance policy - both for the building and its contents.
Rebuilding cost
Within your policy there should be a stated cost for rebuilding the property, which is quite different to the market value of the property (it's normally lower). This should be considered carefully as it can affect future claims if this figure is not accurate. It’s important to get this right to avoid over or under-insuring your property. Your rebuild cost will affect your annual premium – so don’t pay for cover you don’t need. The rebuild cost is how much it would cost to build your property from scratch if it was completely destroyed.
Accidental damage
Tenants are not always as careful when they know the property does not belong to them. Also accidents can happen and it can be costly to call out tradesmen to make repairs or replace items that have been damaged. Accidental damage cover can provide protection for those times where DIY goes wrong or paint is spilled on the carpet for example.
Property Owners' Liability
As a property owner, you could be subject to claims being made against you bythe people living in your accommodation. Insurance policies can include protection for this as part of your cover so that legal costs and any payout awarded could be claimed back.
Loss of Rent
As the rent is the key reason you own a rental property, it can be useful to have cover which pays out if rent it not paid by the tenant. Some policies pay rent for up to 6 months or up to a certain amount although there may be an excess to pay, so be aware of this.
Legal Expenses
Landlords often have to consult with the legal profession on a variety of matters and some policies can cover these costs. For example, pursuing for failure to pay rent or evicting a tenant may all require a legal expert which can be costly. A policy can be tailored to suit your specific needs.
Landlord Insurance is different from contents insurance for tenants which most tenants will need if they are renting a property.
Read more in our landlord insurance guides or get a range of landlord insurance quotes now.