Let Property Insurance - Useful Tips for Landlords
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A let property which genrates a rental income is unlikely to be insured under a normal home insurance policy, if it is, cover may be limited. With a a buy to let property it is worth speaking to a specilaist let property insurance broker who can give advice and information about the right type of let property insurance policies available.
A basic let property insurance policy will cover buildings and/or contents. Typically quotes are comparable in price to regular buildings and contents insurance, although sometimes with a higher excess. Basic policies will protect your let property against damage and theft, rather like regular home insurance.
There are now let property insurance policies available that provide unlimited buildings cover, which means that you don't need to calculate the rebuild cost so you can't be exposed to under-insurance problems.
To calculate the rebuild cost of a let property accurately, you should get a surveyor. However, the Association of British Insurers have a rebuild calculator that will help you work out standard rates.
Be very careful not to under-insure your let property, as landlord's insurance (just like regular buildings insurance) is subject to something called 'averaging', which means your rebuild cover is pro-rata'd. Let's say the rebuild cost of the let property is £100,000 and you insure the property for £80,000. If the property gets £50,000-worth of damage and you make a claim, you won't get the full £50,000. Instead, the insurer will pay £40,000, and you'll have to pay the rest.
Beyond basic let property insurance there are all sorts of optional extras for a landlord to consider. You can have liability cover, which protects you if tenants suffer as a result of your negligence. You can also get emergency assistance; if the tenant is burgled or has a severe leak in the middle of the night, some insurers will take the call and handle it for you.
Another extra is protection of your rental income. If you have a fire and tenants need to move out for a few months, the policy will cover not just the repairs but also the rent you're missing out on through the let property being empty.
You can get rent guarantee cover in case tenants refuse to pay. Alternatively or additionally. you could get legal cover, which covers the costs of taking your tenants to court to evict them from the let property or recover rent. Just remember that, a lot of the time, when people stop paying the rent it's because they truly can't afford it, so you may not get your rent anyway.
You can get an insurance policy that covers more than one let property, but you should compare both joint and single policies to find which is cheapest for you.
Finally, consider the sorts of tenants you have in your let property, as this can affect the insurance premiums. Professionals and families are safe bets, whereas asylum-seekers and multiple occupancies can cost a lot more.
Take a look at our Let Property Insurance Guide for an in depth look at insuring a buy to let property.
