Landlords are very much on my mind at the moment as my daughter is desperately looking for a new flat mate or she may lose her current flat. But as difficult as renting is for tenants, it’s also difficult for landlords: a buy-to-let property is a valuable and potentially high-risk investment which needs to be protected. And having the proper insurance is a critical element of this protection.
There are all sorts of insurance issues that landlords need to consider, and here are just a few:
- Rent guarantee: insurance policies which are specifically designed for landlords are often very similar to standard home policies, but they should also include provision for ‘loss of rent’. However, this is purely provided if rent payments stop because of a disaster such as a fire or flood. A different type of policy is needed if a tenant defaults: this is called a ‘rent guarantee’ policy.
- Landlords’ contents: there is no legal obligation to take out this kind of insurance, but it provides vital protection if disaster strikes. It covers all contents in the property which are owned by the landlord but used by the tenant. A major advantage of this is that it commonly also provides public liability around the ownership and supply of these contents. It can be purchased as an additional section under a building policy or as a stand-alone product.
- Multiple occupancy: a recent court case highlighted the risk facing landlords who don’t declare the true occupancy of their properties. If they don’t, this could invalidate their insurance cover. The case concerned a landlord who had not installed appropriate fire detection or prevention equipment required in a house in multiple occupancy (HMO). These properties have to be licensed and follow far more stringent fire safety measures than separate flats. The landlord argued that his house did comprise separate flats, but the court declared it was an HMO as there were no lockable doors separating each flat. By not declaring the true occupancy of the house, the landlord not only breached housing regulations but also invalidated his buy-to-let insurance.
- Under-insurance: it’s just as important for landlords to ensure their insurance cover is kept up-to-date as it is for conventional householders. We dealt with a case in Hampshire where the landlord of a block of flats with two restaurants on the ground floor had neglected to review his insurance for many years and, when a fire gutted the property, he was left with a hefty bill. We were able to help him by negotiating on his behalf for the very best settlement possible within the constraints of his policy. But more importantly he also then reviewed the insurance on all his properties to ensure this never happened again – a very hard lesson to learn.