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What Insurance Do Landlords Need | Types of Coverage

Written by Posted On Saturday, 15 July 2017 15:11

Before renting out property, it is crucial and prudent to take out insurance. The house might get damaged, and tenants may fail even to pay. Insurance companies will cover such risks for you. So what insurance do landlords need?


1) Buildings Insurance


Buildings insurance is meant to cover possible damage to your structures. This insurance will help you in case of:


• Malicious damage such as vandalism

• Natural disasters

• Subsidence

• Damage by trees, vehicles or any impact damage

• Burst pipes and leakages

• Fires


The policies vary depending on providers. Some might cover more risks than those listed above. In many cases, your mortgage or lender will require you to take this loan. As the landlord, it is also your responsibility to insure the house against damage. Tenants are never required to insure property.


It is important to note that buildings insurance does not cover normal wear and tear. Read through the policies of your insurance agreement to understand what your provider does not cover under buildings insurance. Generally, the insurance will not pay for repairs if your property has not been occupied for over 30 days.


2) Content Insurance


Content insurance covers furnishings, furniture, carpets, fixtures, locks and liability. If you get robbed or experience malicious or accidental damage to your property contents, the insurance will cover the costs of replacing them. All contents in your garden are also covered by this insurance. The maximum amount of money provided for recovery of your contents depends on the insurance product purchased and the company you buy from.


Also, content insurance covers the cost of houses that are unoccupied for a period. Usually, this period is 90 consecutive days. Also, it will cover the loss of rent resulting from damage to the property.


It is important to note that the insurance will not cover the personal property of your tenants. If they require protection from losses, advise them to buy renters insurance. Again, this product does not cover normal wear and tear of your property contents. If your contents get damaged in the course of household removal, you will also not be qualified for compensation.


With many companies, limitations will be imposed if the property is unoccupied at the inception of the policy. If your property is not occupied for a period of 90 days, the insurance company is unlikely to cover the cost of damage to contents.


3) Landlord Liability Insurance


People living or working in your property can suffer an injury in the house. This can be because of a slippery floor or even unstable tiles. Although you may try as much as possible to stick to the laws and safety regulations, accidents can still occur. If a visitor, worker or tenant gets injured or suffers losses as a result of damage to their property while in your house, they can make a claim against you.


Landlord liability insurance is meant to cover your costs if such events occur. The product covers your legal liability as the property owner and employer. Besides, it will cover public liability and occupiers’ legal liability.


4) Loss of Rental Income Insurance


This product is also referred to as rent guarantee insurance. The insurance will cover all rental payments for up to 12 months in cases where tenants fail to pay. It will also cover you after evictions, for some months. This is dependent on the insurance company you purchase from and the policies of the product. Going without rent for months can affect your mortgage payments, and this insurance package can help you keep up with the loan requirements.


Sometimes, tenants can also breach the agreements outlined in the contract. In case this happens, you can make landlord insurance claims in such instances, and the company will compensate you.


5) Landlord Legal Insurance


Disputes can arise with regard to your property. This can be a major financial setback to you as the landlord. Paying lawyers for advice and representation is very expensive, and lots of other costs will be included in the process. Landlord legal insurance cover is meant to cover the legal fees involved. This package will give you access to legal advice free of charge.


Do Landlords have to have Insurance?


The law does not require landlords to take out insurance for their property. However, your lender is likely to require you to insure your property before letting it to tenants. This also applies to insurance for holiday rentals. It is prudent to purchase these products as they will reduce your risks and can potentially save you a lot of money. When selecting an insurance company or package, be sure to read the agreement thoroughly to make sure it covers all your needs.

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Sarah Smith

Sarah works with many real estate business owner to upskill their current license to further their employment prospects.

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