As with standard home insurance, there are two different types of landlord cover to consider - landlord buildings insurance and landlord contents insurance. Here's a quick look at buildings insurance and why it is an essential purchase for your rental property.
What is landlord buildings insurance?
Landlord buildings insurance is a necessity for any landlord. This cover is designed to protect the actual bricks and mortar of your rental investment. It could help you cover costs should any damage occur to the actual structure of the building - such as the walls, windows, roof etc. Any permanent fixtures, like a fitted kitchen, would also normally be covered by your buildings insurance. There are a number of circumstances that could result in damage to your property, such as fire, flooding, falling trees and vandalism, so it's good to be prepared with a buildings insurance policy.
Why should I have it?
Regular home insurance will not be sufficient cover for your property if you are renting it out to tenants. Often called buy-to-let insurance, landlord buildings insurance is one of the best ways to protect your rental investment. Different providers will offer different levels of cover and added extras for landlords, so it's worth shopping around to find the right cover for you. Without the right insurance in place, your property and your rental business could be left vulnerable to certain risks and you may face large expenses. Most landlord policies will include landlord liability cover, which could protect you against compensation claims should someone be injured as a result of a fault at your property.
Any other benefits?
Some landlord buildings insurance policies will include accidental damage cover as standard, while others might offer it as an optional extra. This cover is designed to protect you against damage by your tenants to your building - for example, if they decided to undertake some DIY that went badly wrong. Many policies will also offer you cover against the loss of rent. Typically, this could pay out around 20% of the sum insured if your property becomes uninhabitable because of an insured event. If you have a portfolio of properties, you're normally able to cover them all under the one policy - this sometimes works out cheaper than insuring them individually.
How much cover?
You'll need to cover the rebuild cost of your rental property. This is not to be confused with the market value. The rebuild cost is the amount it would cost to build the property from scratch - as opposed to how much it would sell for. It's normally a lower amount.