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Buying to let or letting out an inherited property is a very tempting way to make some regular income, especially as in the current economic climate renting rather than buying is becoming far more the norm. As a landlord you will need to make sure that you have adequate insurance cover and also make sure that your policy is specifically for the type of let you are responsible for. It is tempting to just let your ordinary insurance policy roll over when you have tenants in the property but this will not cover you against some of the very specific risks that you as a landlord are taking.
For example, even though you might have undertaken exhaustive checks on your tenants, you can still never be absolutely certain who you have in your property and what risks you are taking. Landlords’ insurance will pay for any damage that is maliciously inflicted on your property, fixtures and fittings. A good policy will also ensure that this cover extends to damage done by guests of your tenants; there is, after all, no way you can make sure that all of your tenants’ friends are reasonably behaved people and there is a certain mind-set in some that means they do not respect rented property in the same way that they would respect it if it were owned by themselves or a friend. Horror stories abound about flats and houses which are literally trashed by tenants and without adequate landlords’ insurance you will be facing a potentially huge bill.
Read the small print carefully when you take out your landlords’ insurance policy. Some, understandably, call for the landlord to make regular checks to make sure that the property is being kept in good order by the tenants. This does not imply a lack of trust on the part of the landlord but is rather a measure of the care he or she is taking; sometimes tenants are shy to complain about a problem because they don’t want to be a problem and regular checks will be a good thing for them as well as the owner. Landlords have a responsibility to keep the property in good order and so these regular checks are a good point for discussions.
Landlords’ insurance will include personal liability should the tenant or a guest be injured in the property. There still has to be reasonable care taken and of course the landlord is required by law to ensure that any residential property let out is safe from the point of view of the fabric of the building and gas, electricity and water supplies. Recent legislation requires certificates of safety for all rented properties, but no landlord should rely solely on the production of these; liability insurance is a must and the premium and the sum insured will depend largely on the size of the property and the kind of tenants living there. Landlords’ insurance is a specialist market, but relatively easy to source in today’s buy to let society.
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Cover can be Tailored to include:
- Loss of rent
- Alternative accommodation
- Employers’ liability
- Legal expenses
- Contract works
- Fly tipping
- Property owners liability