Is your rental property insured?

Congratulations, you’ve purchased you first rental property, and you’re about to embark on the rewarding and sometimes rocky world of the landlord. Now that your house isn’t a home, but the business that’s paying your way too, it’s more important than ever to make sure your property is secured and insured. Your rental property is your lifeblood and if you don’t protect it properly – against everything from general wear and tear, to unexpected accidents, to disagreements with tenants – it could end up bleeding you dry.

But never fear, because this is where getting your insurance right can solve all your problems.

Before going any further, the golden rule for all landlords is that insurance is essential (even though the law doesn’t legally require it). It might seem like a good idea now to cut costs by failing to insure your property correctly, but when your tenant calls you at 4am with a burst boiler you are responsible for fixing it. The costs of fixing that boiler up front, or even worse the fall-out of not being able to, leading to tenancy disagreements, could be far more costly than the initial insurance premium. So make sure you’re covered.

Now that’s established, don’t forget that as a landlord you need special landlord insurance for your property, not normal house insurance. Standard insurance won’t cover for things like buildings, contents and third party damage while the building is being let to tenants. Your comprehensive landlord insurance should cover two key areas. First up, it should provide buildings cover, which provides protection against any structural damage (internal or external) from the boiler breaking to cracked masonry.

Secondly, and perhaps more surprisingly to a first-time landlord, you’ll need to make sure you have appropriate contents insurance. This is to cover any carpets, curtains, white goods and furniture etc. that you might be leaving in the property. It’s up to you to gauge the correct value of the contents you’re leaving in the property and insure appropriately.

It’s also worth remembering that landlord insurance often only covers theft when there is evidence of forced entry, so it won’t cover against your tenants walking off with things at the end of their tenancy. For this reason, make sure you take an appropriate deposit at the beginning of their tenancy. Moreover, remember it’ll be the tenants’ responsibility to make sure that their own personal property is insured.

Don’t forget too, that when it comes to rental properties there is more potential value at risk that simply the physical assets of your house and its contents. The rental income from that property may be central to your monthly income, so you need that protected. Say for example your tenants refuse to pay rent, while there are external bodies in place to overcome these issues, it can take months and sometimes years to extract money from problem tenants. In these cases that debt translates into a big red mark on your debt sheet, and it could affect your business massively.

Similarly, as a business owner, once you enter into an agreement with your tenants, you are subject to certain legal demands. If your negligence as a landlord led to tenant injury for example, you could be liable. It’s for this reason that you might want to consider an appropriate business insurance policy on top of your landlord insurance. With competitive business insurance rates available through brokers online and on the high street, it’s easy to arrange.

The important thing to remember with all this advice is that each situation is different. You want insurance that is appropriately tailored to suit your needs, giving you the best protection possible. To arrange this, contact your preferred insurance broker, who’ll be able to give you detailed professional advice.