Rental Insurance 101

So far we at GC have been fortunate enough to have suffered no major problems with our rental property but we are realists and recognise that we could not financially survive one – and that is why we buy insurance.

We often receive guest posts which lightly touch on the topic but to date we have never clearly spelled out the benefits of investing in good insurance products. That ends here.

Nobody likes buying insurance. It’s boring, we have no tangible object to show for all the ££ and there’s always something else we’d rather buy BUT it could be the most important £200 or so that you spend.

What do I need?

  • Landlord liability insurance

According to the Association of Residential Letting Agents (ARLA), Personal injury claims have increased by 85% since 1990 and awards over £100,000 are not uncommon, so suitable liability cover is essential.

  • Landlord buildings insurance

This seeks to protect you against the cost of structural repairs. The Association of Residential Letting Agents estimates that 40% of UK properties are under-insured – it is vital that you make sure your cover represents the full rebuilding cost for your property.

  • Landlord contents insurance

This covers the carpets, appliances, fixtures and furniture on your property. If you’re renting a furnished property, you need to make sure you can replace broken, damaged or stolen items on a new for old basis.

  • Loss of rent insurance

Usually 12 months of cover up to 20% of the buildings sum insured to ensure you won’t be out of pocket if damage or repairs make the property uninhabitable.

  • Alternative accommodation insurance

In case you need to make a claim on your buildings policy and the house becomes uninhabitable while repairs are being undertaken.

  • Accidental damage insurance

To repair accidental damage your tenants may cause to your buildings or contents.

This whole bundle can be purchased from Simple Landlord Insurance. Click here for your free, no obligation quote.

Why do I need it?

Okay so you might be able to cover the cost of a small water leak which costs only a couple of hundred pounds to fix (heck, we did and we didn’t even bother to claim) however it’s the possibility of big things going wrong that make this insurance so important.

Imagine that an electrical fire begins in your property whilst your tenants are away for the weekend. Without anybody to take action, it spreads quickly and soon causes hundreds of thousands of pounds worth of damage. Worse still were your tenants to have been in the property at the time and badly injured or killed.

What would you do first? Could you afford to repair your property? What about the adjacent properties that have suffered second hand smoke damage? And where on earth are you going to put your now homeless tenants?

It’s simple – just call your insurance company and let them deal with it.

Property insurance should be purchased the moment you exchange contracts (before you complete) and should be kept in force until sold.  There really is no point in investing so much time and money into your property if you aren’t willing to spend a little more to secure it’s protection.

And if all that didn’t inspire you to buy insurance, remember this: premiums are tax deductible. So what are you waiting for?

Have you had any “Insurance Saved my Life” moments? Or do you refuse to buy it? Let us know in the comments below.

Caroline Engstrom

Caroline Engstrom has a passion to help landlords and tenants by providing helpful tips and advice regarding real estates.

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