Buy To Let Insurance
There are a number of insurance issues to consider in relation to a buy to let property, the main areas are buildings insurance, contents insurance and legal expenses insurance, each of these are discussed below.
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Buildings Insurance
This type of buy to let insurance covers a wide range of issues related to the physical property itself. When taking out buildings insurance be sure that you are insuring for the re-building cost of the property and not simply the market value, as these two values often do not tally and you could stand to loose out if the market value of your buy to let is less than the cost to re-build should the worst happen.In order to take out buildings insurance covering the re-build cost you will need to have this cost calculated by a chartered surveyor, although some insurance companies will carry this out on your behalf, the insurance company will index link the cover to take into account any rises in building costs year on year.
Your ability to obtain buy to let insurance for the building may be affected by the type of tenants that you have, students and people on benefit are considered to be high risk, and you might have to pay a higher insurance premium if you rent to people in these groups.
Employers and owners liability are usually included with the buildings insurance, these cover injuries that may occur to people working at the premises (such as a decorator, plumber etc), and other visitors such as the postman and meter readers respectively.
Insured events is the term used to describe all other areas that are covered by the policy, these should cover such things as fire and flood damage, lighting, theft and particular to buy to let insurance malicious damage in case a tenant causes deliberate damage to the property and its fixtures and fittings.
Contents Insurance
As its name suggests, this type of policy covers the contents of the property – it should be noted that it covers only the policy holders contents not those of the tenant. With an unfurnished property this will generally be low cost and only cover around £5000 of items, such as carpets, curtains, kitchen equipment and so on. If you have a fully furnished property you will need to increase the coverage to full contents cover in order to take into account the re-purchase cost of the items in the property.Most contents insurance policies for buy to let properties will include landlords liability insurance, which covers the landlord in the event of someone sustaining injury arising from any of the items in the property, such as tripping over a loose carpet. This can be a very important aspect of the policy, particularly with the currently rising levels of litigation being taken against landlords as a result of the recent ‘no win no fee’ compensation claims approach.
Legal Expenses Insurance
Although hopefully something that you will never have a need for, there are cases where a tenant refuses to vacate a property at the end of the rental agreement, resolution of these cases usually required court intervention which carries with it the associated legal costs.Legal expenses cover for your buy to let property will pay the solicitor, court and bailiff costs and other such expenses should you be in a position where you need to force the eviction of a tenant through the courts.
Making sure that you and your buy to let property are fully insured is important, as the costs of the events insured against are potentially large, you should check with specialist insurers to find out what levels of cover you need, to help you to this end, see this list of insurance companies.
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| Buy To Let Mortgages |
| Commercial Mortgages |
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| Buildings Insurance |
| Contents Insurance |
| Legal Expenses Insurance |
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