Buy to Let critical cost control: insurance

Posted 8/07/2016 by: Reeds Rains

From our experience, insurance is a ‘must’ to protect you and your rental property. What’s important is to make sure it is properly tailored to your needs. As a landlord, that probably means taking out specialist insurance from a provider that can cover you and your property against both all the common risks that come with any home and the addition risks associated with letting to tenants.

As ‘standard’, your landlord policy may well include:

  • Buildings insurance for rebuild purposes
  • Accidental damage cover
  • Public liability insurance in case a tenant, contractor or visitor injures themselves in your property.

If you have a leasehold property, check the building insurance cover you pay for will protect your property if tenanted.

Many specialist policies also include some of the following, but do check thoroughly. If they’re not already in place, it may be worth adding to your policy or taking out separate cover for:

  • Malicious damage and theft by tenants
  • Alternative accommodation, in case your tenants need to be re-homed while any necessary remedial works are carried out on the property
  • Rent protection - we offer a very competitive product, backed by Aviva, which covers you for up to 6 months if your tenant defaults  
  • Legal expenses.

You should also consider cover for:

  • Glass & locks replacement
  • Boiler repair or replacement
  • Equipment breakdown, if letting with white goods included.

If you have several properties, portfolio insurance – where all your investments are on one policy – can not only make it easier for you to administrate, with just one premium and one renewal date to remember, but also reduce the cost per property.

Appropriate insurance is a key element in controlling costs and protecting your rental profits, so it’s something you really must get right. If a tenant stops paying rent and deliberately trashes your property, or there is a fire and you have to put your tenants up in a bed & breakfast while the property is renovated, the costs can be significant. And if you’re not covered by insurance, that could easily wipe out your profits for quite some time.

Three top insurance tips:

  1. Check your obligations – e.g. protecting pipework against leaks and damage, and ensuring the property is kept free of hazards – so that you don’t invalidate your policy
  2. Check the exclusions and ask your insurance provider to explain them clearly
  3. Remind your tenants that they will need to take out contents insurance themselves to protect their own possessions.

There good news is there is good innovation in the landlord insurance market, so it’s important to know what’s new and check that you are always paying the best rates in return for cover that protects you as you need it to. If you haven’t checked your insurance cover for a while, the do come and speak to us about the single property, portfolio and rent protection insurance we offer.

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