Selecting a suitable form of landlord insurance is critically important if you are to be confident that your interests are appropriately protected.
There are a number of things to consider and perhaps surprisingly, price should not be one of your initial priorities when selecting a policy.
Look carefully at the types of cover provided
It’s easy to think that all insurance is more or less the same. However, nothing could be further from the truth and particularly so in the case of landlord insurance.
True, typically most policies will offer cover for your buildings. Depending on whether or not you are letting furnished or unfurnished, you may also have landlords’ contents cover in place.
Yet there are certain specific types of risk which may or may not be included. Look for things such as:
- third-party liability cover. Some policies might cap that at £1million whereas others might go up to £5million. Keep in mind that court awards in certain situations can be staggeringly high;
Tenant related risks
Areas where policies may offer very different propositions are those relating to your tenants. That might include:
- whether or not they will accept claims for malicious damage caused by tenants;
- limiting cover to certain categories of tenants and by default, not covering others. Classic categories to look at carefully here might include students, official asylum seekers and housing benefit recipients;
- unemployed tenants. Some policies may explicitly exclude this type of tenant.
You may find policies that will cover all or many of these types of issues. Depending upon your marketing strategy you may or may not need them but it is important to be clear.
Business risk cover
A landlord insurance policy relates to your business.
As a business, your risk exposures may transcend those normally associated with buildings and contents insurance. For example, you may wish to consider landlord insurance that offers protection against some of the following things:
- loss of business premises. For example, if your property is being repaired following a fire, then you will be unable to obtain income from letting it. You may wish to cover that type of loss of income;
- legal fees. Typically, landlord insurance might not cover the legal costs of you taking your tenants to court for eviction but you may be able to cover them in circumstances where you were defending yourself.
You may or may not feel you need these types of protection but they should be thought about in the context of your selection of landlord insurance.
Properties standing unoccupied or under refurbishment
Virtually all property insurance, whether owner-occupier or landlord insurance, is likely to contain clauses relating to the maximum period of time the policy will continue to offer cover while the building is unoccupied.
If you’re planning to do substantial building works or have just been unlucky and are struggling to find new tenants, you may need to consider whether or not the provider of your landlord insurance policy could also offer unoccupied property insurance or special property refurbishment cover in required circumstances.
In the above discussion, price has not been mentioned at all. That’s because of the basic reality that if you have to make a claim on a policy, how much you have been paying for it to date will not be of any interest to you.
Your focus instead will be exclusively on the detail of the cover it provides. That might suggest that it would be a sensible basis on which to select it in the first place!