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Let Property Insurance FAQs

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Let Property Insurance FAQs

Let Property Insurance FAQs

Home insurance is home insurance – does my insurer need to know it’s let? Do I need let property insurance instead?

  • the moment your home is let to tenants, it is no longer the home in which you live, but one that is let as a business to generate rent;
  • if you fail to inform your insurer of this change of use, you may find that any claims you make under the terms of your standard home building and contents insurance are flatly rejected;
  • if the property is let, the appropriate form of cover is let property insurance – also called landlord insurance or buy to let insurance – which is available from specialist providers such as those of us here at GSI Insurance
  • note that if you have a homeowner’s mortgage on the property and are now letting all or part of it, you will need to get permission from your mortgage lender to do so, as well as let your local council know.

But do I need to have let property insurance?

  • if you are running your buy to let business with the help of a mortgage to buy the let property, your mortgage lender is almost certain to insist that you have adequate building insurance as part of your landlord cover;
  • beware, though, that the mortgage lender’s requirement may be cover for only the amount lent and may not offer the full protection you may need;
  • if you are free of any mortgage considerations, you may decide to forego the protection of buy to let insurance – but at the potential price of losing both your investment property and the business that goes with it
  • this is because, without adequate let property insurance in place, loss or damage to the property, or third party claims from your tenants, will need to be addressed out of your own pocket.

How much building insurance do I need?

  • when arranging any kind of property insurance – including property you intend to let – it is necessary to anticipate a worst case scenario in which the building is completely destroyed or razed to the ground;
  • the total building sum insured, therefore, needs to be sufficient to cover the cost of rebuilding;
  • rebuilding costs are different both from the price you may have paid for the property and from its current market value – and they may change over time, of course, so necessitating period review and revaluation;
  • the Royal Institute of Chartered Surveyors has a handy House Rebuilding Cost Index which might be useful in keeping up to date your estimate of reconstruction costs.

Who is responsible for insuring the contents?

  • your tenants may be living in a building owned by you, but they are nevertheless entirely responsible for insuring their own personal effects and belongings inside the let premises;
  • as landlord, though, you may have belongings, furniture or furnishings – especially in common areas of circulation – which you are responsible for insuring;
  • some landlord insurance policies cover not only accidental damage – to either the structure and fabric of the building or to your contents – but also malicious damage caused by your tenants.

Is my liability towards tenants covered?

  • as the landlord of the let property, you have a duty of care towards the health and safety of your tenants;
  • if one of them is injured or has their property damaged as a result of your negligence of that duty of care, you may face a potentially very substantial claim in compensation;
  • this risk is typically included under the terms of your landlord liability provisions, which together with your more general liabilities as the property owner, may cover as much as £1 million or more.
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