A point we’ve often made in our blogs is that it can be impossible to say precisely what your landlord insurance policy covers and doesn’t – unless it’s one of ours of course!
The only way to be sure is to sit down and read it or get the help of GSI Insurance at the outset.
However, there are certain typical components of landlord insurance that we can explore here.
Domain of cover
As the name suggests, landlord insurance exists to cover some of the risks faced by people letting their property to others.
Perhaps the single most important thing to stress at the outset is that there are typically no circumstances under which you can obtain rental income from your property (even if you’re only letting a part of it) and still use standard owner-occupier policies for buildings and contents insurance. Any claims you might make against an owner-occupier policy in such a letting situation, might well be refused as a result.
If you’re using your property to generate rental income, you’re a landlord by definition and need appropriate landlord insurance.
This is much as you might expect. It offers financial protection should the bricks and mortar of your property sustain damage due to perils such as storms, fire, floods and subsidence.
In passing, subsidence isn’t always included as a standard risk on property insurance cover. Some policies might also operate restricted cover for areas known to be prone to flooding.
This again should be familiar territory.
Two points worthy of mention:
- some tenants (and the occasional landlord) confuse this with cover for tenants’ property. In fact, this cover is for YOUR contents not those of your tenants. It might be advisable to specify this in your letting agreement so that they’re clear that they must insure their own possessions;
- even if you let unfurnished, be cautious about dispensing with contents insurance. What you might consider to be fixtures and fittings, therefore covered by your building’s policy, might differ to your insurer’s view.
Third party / public liability
This is exceptionally important and an area of risk/cover where landlord insurance might differ significantly from owner-occupier cover.
Remember, your tenants or their guests might sue you for injury or damage to their property, which they attribute to be as a result of negligence on your part. If a court happens to agree with them, the awards against you may be high.
Landlord insurance might also bring with it a range of specialist cover related to:
- your legal costs and expenses if engaged in a legal dispute with your tenants (certain types of legal action might be excluded);
- income continuity (meaning where you’re unable to let your property out due to an insured peril);
- theft or destruction of your property due to your tenants (conditions typically apply).
As a landlord, you’re running a business. It might for some casual landlords, not seem like it but it is a legal fact of life.
As such, having appropriate business-style insurance is highly advisable or even required, for example in cases where you have a mortgage on the property concerned or if local registration formalities demand such cover.
It is a subject to be taken seriously.