What insurance do you need to protect your income and profits?
Landlord insurance is a key strategy to help minimise risks and maximise profits as a buy-to-let landlord. However, like other insurances, landlord insurance is not ‘one size fits all’. To ensure that you select the correct insurance cover for your needs, you should understand the types of landlord insurances available and which aspects of your buy-to-let property are they protect.
Here is a general overview of six types of landlord insurance that you may need to consider.
1. Landlord contents insurance
This type of landlord insurance pays the cost of repairing or replacing items that belong to you and that are in your buy-to-let property. It will generally cover damage and theft, and you should make your tenant aware that this insurance does not cover items that belong to the tenant – we explain this to the tenants of our landlord clients, and discuss tenant insurances that they may need.
Wear and tear is not covered, and you should also consider accidental damage insurance to cover accidental damage caused by your tenant.
2. Landlord building insurance
Like the buildings insurance that a homeowner takes, landlord buildings insurance will cover the cost of making repairs or rebuilding your buy-to-let property if it is damaged or destroyed by a disaster like a flood or fire. It will also cover damage caused by vandalism.
3. Accidental damage insurance
Accidents happen in homes. Tenants spill wine on carpets and sofas. When furniture is moved, the walls are sometimes damaged. A slammed door can fall off its hinges or damage doorframes. You may need to add accidental damage insurance to your landlord insurance policy, though it may be covered by buildings insurance or contents insurance.
The cover can include damage to the building or your items in it, and pay for repair or replacement. Like contents insurance, it does not cover wear and tear to the building or its contents, and it does not cover your tenant’s items.
4. Landlord liability insurance
This type of insurance protects you against claims made against you by tenants and their visitors if they suffer an accident or injury in your buy-to-let property. A loose carpet at the top of the stairs may cause a tenant to fall down the stairs, causing an injury that keeps them off work for several weeks or months (or worse).
Cover provided may include legal fees and compensation payments (which might include healthcare costs and loss of earnings, for example) to the amount covered under the terms of your policy.
5. Rental guarantee insurance
Rental income is important to you as a buy-to-let landlord. It should cover your mortgage and expenses and provide valuable ‘free cash’ for you to improve your lifestyle. But what happens if your tenant stops paying their rent? You need to continue to pay the mortgage and other expenses, and your reserve fund may not be large enough.
Rental guarantee insurance pays unpaid rent and helps to protect you from losing your investment because of a poor tenant. Usually, the rent will need to be at least one month in arrears and you may need to have served an eviction notice on the tenant.
6. Loss of rent insurance
Insurance that protects you from loss of rent differs from rental guarantee insurance in that it protects against loss of income caused by events such as fire, flood, subsidence, or other damage. If such an event made your property uninhabitable, your tenants would be forced to move out while repairs are made.
Loss of rent insurance helps you by paying any shortfall in rent caused by an insured situation, helping you by ensuring your cash flow is not harmed because of something out of your control.
Using different types of landlord insurance enables you to build the insurance cover that you need. There may be risks that you are happy to accept, while other risks you may deem unacceptable to leave uncovered. Adding the different cover available to a standard policy will ensure that you benefit from the peace of mind that allows you a good night’s sleep every night.
Contact us here at Ezytrac at +44 0 1522 503 717 to discuss your landlord insurance needs, and benefit from our access to our partner Goodlord and their incredible peace of mind landlord insurance policies.
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