If you own a property you are planning to let out to tenants, you will need to have appropriate insurance in place to cover you against some of the issues you may encounter as a landlord. Buy-to-let insurance provides financial protection for landlords, from the minimum compulsory level of cover, through to a whole range of other different types of insurance, designed to safeguard your buy-to-let business.
Standard home insurance is not sufficient when letting out a property because there are additional risks concerning buy-to-let properties that are not taken into account. Specialist buy-to-let insurance protects you and your property in the event that something goes wrong.
So, what is covered as standard when you purchase buy-to-let insurance? Every buy-to-let insurance policy must have buildings insurance. This covers the rebuilding of the property if it is significantly damaged. The risk may be higher for buy-to-let properties because, generally speaking, tenants are not quite as careful as homeowners.
In addition, a suitable buy-to-let insurance policy should include landlord liability insurance (in case a tenant suffers an injury or illness at the property), contents insurance (to protect your possessions from accidental damage and theft), and rental guarantee insurance (if a tenant fails to pay their rent on time).
Other optional extras are available, but every landlord must decide for themselves whether or not it is worth including such additional cover. For instance, you may wish to incorporate some of the following when you take out a buy-to-let insurance policy:
- Unoccupied insurance – cover for when the property is uninhabited.
- Emergencies insurance – cover against property issues such as leaks, break-ins and boiler breakdowns.
- Accidental damage insurance – cover against damage to your property usually caused by people (if you have a good level of contents insurance, you may not require this).
- Loss of rent and alternative accommodation insurance – cover in the event that the property becomes uninhabitable.
- Legal expenses cover – cover for the legal costs if a tenant makes a claim against you.
- Landlord emergency cover – 24-hour access to assistance in the event of an insured emergency at your property.
It is worth considering the level of cover you require, bearing in mind that some mortgage providers will only give you a buy-to-let mortgage if you have certain policies in place. It does not matter who your tenant is, as every tenant poses a potential risk. However, your premium may be lower if you are renting to a family, as opposed to students, for example.
The cost of the policy will depend on the property, the type of tenant, and how much protection you require. It is essential that you purchase the right level of cover for you and your buy-to-let property, but there are steps you can take to help reduce payments, such as by tightening up security, only renting to professionals, or by not allowing pets.
If you own more than one buy-to-let property, a multi-cover policy may be more cost-effective and easier to manage. You can opt for policies that cover any number of properties, but if you have a certain property that poses a higher risk, it may better to cover that one separately.
As a general rule of thumb, the cheapest policy will not be the best. By speaking to our experts at NIS, you will be able to compare a range of buy-to-let insurance quotations from a number of different UK providers to make sure you are getting the right deal for you, tailored to your own unique requirements.
Getting good advice for your individual circumstances is key. For further information, call NIS on 01609 773 748 or request a quote today!