Category : News Published : 22.10.2018

Landlord Insurance: Not Compulsory, but Useful

If you are one of the UK's 2,5 million people who rent out a home to tenants, then landlord insurance is worth considering. This thing is not compulsory but can prove useful, as it will cover financial losses connected with your rental property that might occur. The policy will protect the house, tenants and your investment as a whole. Some will also pay out if a tenant misses his/her rent payments. So, protect your property, keep your tenants happy and deal appropriately with any issues that may arise.

What’s behind the term “Landlord Insurance”?

The term "Landlord Insurance" is commonly used to describe "Landlord Buildings & Contents Insurance". So, when someone says "Landlord Insurance", they mean cover for their buildings and/or contents. In this article, we will talk about contents insurance, because quite a lot of homeowners think it unnecessary. However, a landlord is running a business and the tenant is the consumer. The risks that need to be insured against are similar to home insurance as they include covering the building and structure against problems such as fire or any other kind of damage, as well as things inside, such as furniture, kitchen appliances etc. It would be also wise for a landlord to have the policy cover additional risks, such as malicious damage by a tenant, which is not often, but happens sometimes. Some policies have public liability, so if you are sued for damage to someone else's property, you will be covered. For example, if a burst pipe in your property causes a flood in your neighbour's flat, you will be insured for the legal costs.

The right value of your possessions

Landlords often overvalue their property when it comes to buying buildings insurance, but undervalue their possessions when they buy contents insurance. This is because with buildings insurance they estimate the rebuild value - this is the cost of rebuilding a home from scratch. However, some people confuse this with the market value of the property, which is likely to be significantly higher. For contents insurance, it would be good for you to go from room to room and make a list of everything from the smallest things and gadgets to each furniture piece. For each item, you should note down how much it would cost to replace it new and then sum up the total. Valuable things like art pieces, notebooks, cameras, jewellery etc, may need to be highlighted in the policy. Policies will normally have a single limit on the amount you can claim for any individual item. The amount is normally around £1,500-£2,000, so make sure that this is enough for your needs. If you have valuables that are worth more than this limit, you should inform your insurer and find out how much extra it will cost to protect them. You can also take a special cover for these items. Try not to under-value your possessions, because the insurer may reduce your payout should you claim. For example, you say you have £10,000 of belongings, but in reality, they are worth £20,000. If it happens so that you are burgled and £4,000 worth of valuables are taken, the insurer might only pay out £2,000 if it finds out that you under-declared the total value of your possessions by half. Therefore, it is always good to set the right value of your possessions when buying contents cover.