Buy to let properties have become a firm favourite with property investors since is become a mainstream investment option back in 1996, with the launch of an initiative by the Association of Residential Letting Agents.
As investment is has been proven again and again to be highly desirable, but as a day to day, operation owning buy to let properties comes with its own unique issues. It is these issues that make buy to let insurance a necessity, protecting landlords against anything that might go wrong (and many things can).
It is a different type of cover to standard home insurance, covering not just the building but aspects like loss of rental income, protecting both the material assets and your investment long term.
This is the lowdown on buy to let insurance:
What does buy to let insurance cover you for?
These are the common things that your policy will protect you for:
Third party loss, injury or damage
Property owner's liability covers you when you are legally obliged to provide compensation when someone suffers loss, damage or injury on your property. Buy to let insurance will help you cover these expenses. It is your responsibility to maintain the property, but things do go wrong.
You can’t keep on top of everything that is going on in your property, and things do break. Buildings wear and tear, and damage is inevitable. Buy to let insurance will cover for anything big and costly that might happen.
Alternative accommodation for tenants
Assume the worse does happen? The electrics stop working, a water pipe bursts and floods the house, a roof collapses, there is a house fire (yes, these things do happen) and it is dangerous for the tenants to remain in the property. Where are they going to go?
Part of your responsibility as a landlord is to supply alternative accommodation if the property becomes unliveable. Buy to let insurance will cover the costs of this. There is often an upper limit of 20% of the entire insured amount on claims like this.
Loss of rental income
When your property becomes uninhabitable you can’t be charging rent to live there! Most cover offers a reimbursement of 20% of the sum insured in rental income that you would have received over the period.
What optional extras can I cover with buy to let insurance cover?
You might decide to cover yourself further, depending on your situation and the tenants you have. These are some of the optional extras often offered with buy to let insurance:
If you rent a furnished property, with items like sofas, televisions, white goods, contents cover will help you with the cost of damage. You only need to cover the contents owned directly by you and not the tenants.
Theft or deliberate damage by tenants
With the best will in the world, you can never fully predict everything that will happen and tenants can sometimes turn out to not be who you thought. This will cover you if a tenant steals from you or deliberately damages your property.
What does buy to let insurance exclude?
As with all insurance policies, certain things are excluded from buy to let policies, that you should be aware of when purchasing cover. These are the most common things that are left of buy to let cover:
Storm damage to external assets
Weather damage to outdoor elements such as gates, fences and hedges are not usually covered by insurers.
Most insurers offer reduced or no cover when a property is unoccupied or in between tenants. It is worth looking into how you can be covered in these situations.
To fully understand the ins and outs of buy to let insurance, the coverage and where you can get the best insurance deals it is worth talking to an expert broker.