Landlord’s Insurance? - why bother? ( !! )

As a landlord, you need to protect your property investment. Normal home insurance policies are not valid when you are letting the property. You need a residential landlord insurance policy. This applies whether you are a private individual letting out a single flat, or a property company with multiple properties.

With the correct landlords property insurance in place, you are protected against most of the financial consequences of problems relating to your property.

For example: Landlord’s insurance would pay you should the following happen:

• Your property suffers flooding or significant unexpected subsidence.

• Your property is massively damaged by a fire.

• In the above two scenarios - your tenants have to move out as the damage is so bad. It takes builders and decorators 3 months to repair the damage. Your landlord’s insurance policy would not only pay for all of the work to repair the property but also pay you the rent that you are losing out on by not having tenants living in the property during this period.

• You have tenant problems. They stop paying the rent and refuse to vacate the property. You take them to court to have them evicted and collect rent owed to you. If you have purchased “Legal Expenses” cover as part of your Landlord’s insurance policy then some or all of your costs accrued in fighting the court case could be repaid.

Why am I not already covered under my normal home insurance?
Home insurance policies will not pay when the property is being rented to tenants). You must therefore buy a Landlord’s Insurance policy which is especially designed and rated for these circumstances.

If I have several properties, can I buy a multi-property insurance policy?
Yes - several insurance companies provide landlord insurance policies for multiple properties.

How do insurers calculate the premium for Landlord’s Insurance?
Different insurers use different ways of assessing the risk of your property and therefore the cost. Some of the factors are:

• Property location

• The Buildings Sum Insured

• The type of tenants renting the property e.g. professionals / students / DSS

• A history of previous claims

• The age of the property

• The type of property (flat, detached, terraced etc)

• Landlord risk assessment

What is the Buildings Sum Insured (BSI)?
You may be asked to estimate the Buildings Sum Insured (BSI) when going through the process of getting a Landlord’s Insurance quotation. This is an estimate of the cost for rebuilding your property should it be completely destroyed. Do not confuse this is not the same as the value of the property (which may be considerably different) otherwise you may pay too much or too little for your insurance. For a helpful calculator - see http://abi.bcis.co.uk.

Ensure that you do not understate the BSI since should it come to making a claim, the insurers will reduce the amount that they pay you in proportion to the amount you have underestimated.

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