As a landlord, you are not always obliged to have building insurance for your let property. But there are many instances when it is a safeguard you cannot – and would not want – to avoid, since buy to let mortgage lenders invariably make it a condition of any advance that the property is protected by adequate building insurance at all times.
Despite that requirement, however, many insurers may make it difficult, if not impossible, to comply with your mortgage conditions, because their policies specifically exclude cover if and when your tenants are in receipt of housing or unemployment benefit.
Although the whole system of welfare benefits, including housing benefit, is about to change, with the introduction of a new system of Universal Credit, there is little sign of insurers changing their negative attitude towards such tenants – on the contrary, the system of Universal Credits may harden their thinking still further.
Building insurance for housing benefit tenants
With adequate building insurance still required by your mortgage lender – not to mention as a safeguard for your own investment in the property – and regular insurers wary of arranging cover when your tenants are on benefits, you need a specialist form of insurance, available from ourselves here at UKinsuranceNET.
It is purpose-designed building insurance for housing benefit tenants, or those who are unemployed, and, unlike many other standard landlord building insurance policies, remains entirely valid whatever group of tenants you target as good for your buy to let business.
What does Landlord DSS tenant insurance cover?
If you need cover which includes landlord building insurance for unemployed tenants and those on other welfare benefits, of course, you need to know what risks are covered:
just as the name suggests, building insurance is designed to protect the structure and fabric of your property against the risks of loss or damage;
the risks are many and varied – those typically covered in your landlord building insurance policy might include ire, explosions, earthquakes, fire, floods and storm damage, impacts (from vehicles or from falling objects such as trees and branches), vandalism and theft or attempted theft;
some of the policies we arrange here at UKinsuranceNET also go a step further than many other building insurance policies by incorporating cover for malicious damage caused by your tenants;
one of the principles of building insurance – including landlords’ building insurance for housing benefit tenants and the unemployed – is that the total building sum insured is sufficient to cover the cost of completely reconstructing the property in the event of a major incident;
the sum needs to cover the cost of demolishing what may be left of the property, clearing the site and completely rebuilding the premises – an amount that is clearly different wither to the price you paid for the property or to its current market value, and one which may be updated from time to time with reference to the index of building costs published by the Royal Institute of Chartered Surveyors (RICS)
In order to get the financial protection of your property that both you and your buy to let mortgage lender require, you may need specialist landlord building insurance for unemployed tenants and those in receipt of housing benefit – or its successor, Universal Credit.