Broadly speaking, there is much within landlord insurance policies that should be familiar to almost anyone who has previously owned a property as an owner-occupier.
There are though some important differences and subtleties which we’ll examine here.
An important precursor
Before getting into the nitty-gritty, it is worth re-stating that, however similar landlord insurance may be at first glance to owner-occupier home insurance cover, they are fundamentally different policies.
If you are generating rental income from letting out a property in full or part, then you are a landlord. Owner-occupier policies will not be appropriate under any such circumstances, should that be the case.
As a landlord, you should never be in any doubt of this basic insurance reality. If you wish to protect your financial interests (and comply with the typical conditions of a loan agreement should you have a buy-to-let mortgage), you must take out let property insurance.
What the policy covers
It is imperative that you understand the cover a specific policy is providing rather than make assumptions based upon what you might have read in general articles.
That’s because you may be surprised to know that there can be very significant differences between one landlord insurance policy and another in terms of the cover they provide. Some may be far more suitable for your individual circumstances than others.
However, as a general rule, you might expect landlord insurance to offer cover for the following:
- your buildings. This should be a very familiar category of cover and includes restoring or potentially totally re-building your property should it be seriously damaged by a range of specified perils;
- your contents. This type of cover protects you against a range of risks that might result in the destruction or theft of some of your furnishings;
- third party liability. This is exceptionally important when you have tenants in your property who in turn may have numerous guests and visitors. It’s worth being clear that if they suffer an injury they believe to be attributable to your property and a court agrees with them, the financial damages awarded against you may be very significant;
- loss of income. This can make a contribution towards the loss of income you’ll experience should you not be able to let your property in the event it is put out of commission by an insured peril. Note that this does not include circumstances such as tenants fleeing without paying the rent, tenant arrears or delays in finding new tenants;
- legal fees in qualifying circumstances. This might be exceptionally important if you are trying to defend yourself in, for example, a legal action relating to you being sued under third party liability provisions.
Things that standard landlord insurance typically may not cover
They might include:
- the goods and possessions of your tenants or their visitors;
- legal disputes between you and your tenants relating to things such as unpaid rent, the interpretation of the tenancy agreement or where you’re being sued for failing to meet your legal safety obligations as a landlord;
- properties that are in unoccupied status (typically defined as being a property that has not been occupied for a specified period of consecutive days – that’s usually somewhere between 30 and 45 days);
- situations where your tenants are using the property for commercial purposes.
Your insurance provider will always be only too happy to confirm specific details relating to the individual policy or policies.