What is Landlord Insurance and why would I need it?

Nov. 28, 2011 - PRLog -- If you’re a landlord, you rely on constant revenues from your property to deliver your earnings. Traditional home insurance cannot provide the cover necessary, so by taking out landlord insurance you can help prevent any possible intermissions or disruptions to this stream of income. It is just common business sense that you would invest in this form of protection.
The main points of cover are easy enough to understand. Buildings insurance will cover damage to your property, such as that caused by fire or burst pipes. If tenants are forced to temporarily move out as repairs are undertaken, you will receive a level of support for this – additional products are available that cover 100% of your lost income, should alternative accommodation become necessary due to the damage.
Meanwhile, public liability insurance protects your business against claims made due to third person damage, such as masonry falling from the building and hitting someone walking past. Additional cover available includes Landlords Contents Insurance, designed to protect against damage caused by your tenant to items you have provided, like soft furnishings and light fittings. It is important to remember that this insurance will not cover the tenants’ own contents, which should be covered separately in their own contents insurance.
Employer’s liability insurance is another important facet if you incorporate more business elements into your landlord role and end up hiring others. If you hire staff to maintain a portfolio of properties and run them on your behalf, it is a legal requirement to have this as it can protect you against compensation claims made by any employees injured at work.
There are a wide range of different factors used by insurers when assessing the risks to a property and how much premium they should charge. Major factors will include: the location of the rental property (usually judged on postcode); the type of tenants in the property; how secure it is; any past history of claims; how old the property is; and, quite importantly, the type of property it is that you rent out.
What Does Landlord Insurance Not Cover?
When it comes to the contents of your property the insurance usually only covers cases of theft where there was forced entry. This means that your tenants could decide to take some of the contents or fixtures of the property without any compensation for you. This is why it is important to have a sufficient deposit in place if your landlord insurance still places certain items at risk.
There will typically be a number of other exclusions from your landlords insurance which will vary from company to company. This could include the first few hundred pounds (or other fixed amount) of certain claims. Landlord’s policies may also not be suitable as home insurance for properties used for holiday lets, or those that are unoccupied for long periods of times.
What do I think?
It is very important that you do not pay for cover you do not need either. While it is important to ensure you get everything you require from your insurance, check that this is not a one-size-fits-all policy designed to cater for those with far more requirements. That is why it is extremely important to speak with a financial adviser to make sure you get the right policy for your exact requirement. If you would like to discuss landlord insurance in more detail please get in touch with us on 028 90 668700 or by emailing myself at sarah.mcafee@censusfinancial.co.uk.

Sarah McAfee
Financial Planner

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Census Financial Planning is an independent financial planning practice providing a professional and comprehensive financial planning service, located on the Lisburn Road in Belfast, Northern Ireland.