Your rental property is technically a commercial business. As such, it should provide you with a source of revenue that covers your costs and brings a profit. However, with any business, if that revenue stream is cut or delayed, the only thing you are left with is an enormous amount of cost which can threaten your financial health and livelihood. For landlords, losing rental income, incurring property damage, or fighting a lawsuit can result in substantial losses.
As a result, Anyone who rents or leases a living space should consider taking out landlord insurance. Having insurance will help protect your investment and cover you in areas where traditional home-owners insurance will not suffice.
Why Obtain Landlord Insurance?
Over forty percent of property in the United Kingdom is under-insured. This is because many landlords mistakenly believe that their home insurance will cover them in the event a tenant damages their property or fails to pay rent. The benefits of landlord insurance includes but is not limited to:
- Cover for a flat, a rental home, or bungalow – Any damage caused by a tenant is generally covered by landlords insurance.
- Commercial and residential bundled together for cheaper rates – Landlords insurance is often packaged together with your residential home insurance to allow for more savings.
- Cover for loss of rent – If a tenant were to abruptly leave, or if you were forced to remove them as a result of damage to your property, you would lose out not only on the cost of repairs, but the monthly rent that should have been paid while the domicile was being fixed. Landlords insurance would cover those costs.
- Liability claims – If a tenant were to file a claim for an injury or damage to their personal property as a result of your negligence, landlords insurance would cover the cost of any medical bills and legal expenses in fighting the claim.
The Cost of Landlords Insurance
The cost of any insurance depends largely on the amount of risk the policy provider will undertake. For landlords, this generally means the larger the building, the higher the premiums. However, the contents inside will factor into the overall valuation, as well as your claim history and the postcode of your property.
Why Should I Buy Landlord Insurance?
Anyone who owns a property that is used for commercial reasons should purchase landlords insurance. While there is very little cost associated with insurance, the potential losses can be catastrophic. Considering how large your capital investment is, it is important to protect it with adequate insurance.
Building and Contents Insurance
With most insurers, the contents portion of the policy can be tailored to your individual needs. Tenants may not properly care for your furniture, carpets, and other furnishings, and you may wish to cover these items if they are of significant value. Conversely, you may choose a lighter policy if the most expensive items are the building and the land itself.
Given the flexibility of a landlords insurance policy, it is important to talk with a broker or insurance expert regarding what kind of cover your property requires. Tailoring your policy can lower your premiums while at the same time giving you extensive cover on the things you value most. Insurance will also allow you to rent out your property without having to constantly worry about the condition of your belongings.
As a landlord, you are often asked to accept a tenant without knowing what condition they will leave your property in when they leave. With landlords insurance, you don’t have to take on that risk by yourself.