Landlord Buildings Insurance

Landlord buildings insurance

A landlord’s rental property is directly related to their income stream. If it is damaged then not only will they suffer repair bills and a possible loss in the value of a capital asset, but they may also suffer a significant loss of income while the property is under repair. That’s why landlord buildings insurance is important, because having the right cover in place will mean that any problems can be speedily and effectively dealt with in the confidence that the costs will be covered.

At the outset though, it is important to understand a major distinction between private residence household insurance (contents, property or both) and insurance for landlords.

Private ‘primary residence’ insurance is available that covers buildings, fixtures and fittings plus contents. Most people are familiar with these products but may not be aware that they will not usually cover the policyholder if the property is being let out. The insurance will often be immediately invalidated if the property is rented out even on a short-term basis for example, a holiday rental, as most insurance companies will consider that the risks to a property are higher when it is occupied by tenants as opposed to the owners.

The property-related risks to a landlord may be seen as falling into two categories – those that are familiar to the owner-occupier and those that are perhaps more specific to the nature of property rentals.

In the former category are the common but very real risks associated with fire, flood, subsidence, burglary and so on. In the latter category come things such as tenant-generated risks including theft, accidents, malicious damage/vandalism and damage caused by neglect.

Legal liabilities

On the same subject, the liabilities of a landlord are different to those of a private householder. In particular, a landlord may have very significant legal liabilities for the safety and security of third parties (not just the tenants) when on his or her property and this is particularly true for commercial buildings. While tenants may be contractually bound to provide their own forms of liability related insurance, in practice this will not necessarily remove any potential legal liability from the landlord.

In the event of a major problem relating to a rented property, the repair or legal liability costs could easily go into six figures. This is not the time that a landlord will wish to discover major holes in their insurance cover and that is why landlord buildings insurance is so important.

There are several types of landlord buildings insurance that are customisable to the needs of a landlord depending upon whether or not the basis of the rental is commercial or residential; contents are included; it is a sole or shared building; and so on. Ensuring that the right policy is selected is not always easy and specialist advice may be desirable.