As with any investment, property comes with its risks and so for a landlord, whether you just have one property or a portfolio, you want to mitigate those risks.
One of the ways to do that is by taking out insurance and soI wanted to take the time to educate landlords on what insurances are available and how they protect you.
The different types of insurance vary as to whether they cover the building, the internal part of the building, the fixtures, fittings and furniture, or whether it relates to the people actually living in the building.
And for clarity, this is not advice about who to go to for insurance, and it doesn’t cover all the details, I just want to make sure that our landlords at Rocket are as informed as possible and then it’s up to you to do the necessary research, and check the details of the cover available from the various companies in the market place.
Building’s insurance
While there is no legal requirement to take out building’s insurance, it will often be required by the mortgage companies if you want to take out a mortgage.
One of the most useful parts of building’s insurance is it usually comes with some sort of liability cover.
So, in the event of a fire or burglary, you’re covered.
This also means that you should be covered in the event that somebody comes into the property and they trip over or damage themselves and it’s something to do with the building.
Building insurance will generally cover the building and everything attached to it, which usually means kitchens, bathrooms and whatever else.
Content’s insurance
Either the landlord or the tenant can get contents insurance.
For the landlord, if you’ve provided furniture, carpets, blinds, curtains or whatever else then it covers you and the same applies for tenants, if they take out the insurance they are covered for any of their belongings in the property.
Some tenants will choose to take out accidental damage insurance as well in case they damage some of the landlord’s furniture and that way it doesn’t have to be taken out of the deposit.
Contents insurance can also protect landlords in the event of a loss of rent.
For example, if the building burns down and you lose your rental income, but you still have to pay your mortgage, then this will cover you while you rebuild the property and look for new tenants.
Rent guarantee insurance
When a tenant occupies your property, they have to be referenced and off the back of that, if you want to make sure your rent is paid you can get rent guarantee insurance.
This is pretty self-explanatory, but it covers the landlord if the tenants cannot or will not pay the rent, whether it’s because they’ve lost their job or just simply can’t afford it.
With rent guarantee insurance, it may also cover the costs of serving notice and the legal fees related to getting the tenant to vacate the property.
Pet insurance
It used to be the case that most landlords would not allow pets in their property, but that will no longer be possible after the introduction of the Renters Reform Bill.
But, if a tenant does want to bring a pet into the property, if and when the Renters Reform Bill becomes law, landlords will be allowed to require tenants to take out pet insurance to cover any potential damage that the pet might cause.
What insurance do I have as a landlord
I have worked in property for over 30 years and I am a portfolio landlord myself, so these are the insurances that I have decided to take out.
I always take out building’s insurance as an absolute minimum due to the fact that it not only covers the main asset, but it also contains some liability cover.
Sometimes I’ll take out content’s insurance dependent on how valuable the contents are that I own in the property.
And very occasionally I have taken out rent guarantee insurance when I have had concerns that the rent might not get paid by the tenants.
To leave you with one piece of advice, if you’re looking to take out insurance, make sure you research the insurance companies and the details of the cover available and check it matches the risks you want to cover.
