Many people have joined the buy to let market over the last few years. With share prices performing poorly and interest rates at historically low levels, it seems like a reasonable place for anyone with spare money to invest.
Unfortunately, it’s surprising how many of these investors don’t take on the appropriate protection for their investments. Many new landlords expect that standard house insurance is acceptable for their needs and find out the hard way that it doesn’t offer them the cover they need.
Buy to let insurance is designed specially for the needs of landlords. Unlike standard home insurance it takes into account the additional risks that come with renting out your property and provides a level of cover that addresses this. A good landlord’s insurance policy will provide you with the following things:
1. Legal expenses protection. If things get really bad you’ll be glad of this. Let’s imagine for example that you are unlucky enough to get a dreadful tenant. He refuses to pay, and after the statutory waiting time you take measures to have him evicted. This isn’t an easy process, it can take a long time and it costs money. You can lose rental income and end up with legal costs for your solicitor. The right insurance policy will provide you with cover against this and pay out for legal expenses.
2. Loss of income cover. Good policies will also protect you against loss of rental income. This could be due to a bad tenant or simply a span when your house is empty and you have no rental income. It’s reassuring to know that your insurance policy will pay out to provide you with an income.
3. Accommodation expenses. What if the unthinkable happens and your house catches fire? What if it gets hit by a tree and it’s not fit to live in for a six month period. Did you know that as a landlord you are responsible for finding your tenant new accommodation? A good Landlords insurance policy provides cover against this so that you aren’t saddled with hotel bills while your house is being repaired.
When you own a rental property you need to make sure it’s properly protected. It’s important to get the right cover at the right price, so how do you avoid paying more than you need?
One of the most significant things to consider is the sort of tenant you accept. Some insurance companies will offer you a lower premium if you rent to a certain kind of tenant. If you are able to choose your tenant you should be looking at professional people with good references. They represent a lower risk so will attract a lower premium from your insurer.
Can you insure more than one property? If you have more than one rental property you may find you get a better deal from your insurer if you insure in bulk. When you apply for your Insurance ask if any discounts are available and if so, consider shifting all your properties to one insurance company.
So it costs a little more, but when you appreciate the additional risk of being a landlord it makes sense to take out the right level of cover.

Doug Walker Dip CII is General Manager of Academy Insurance Services Ltd. Academy is an independent insurance broker specialising in niche insurance markets such as buy to let insurance and unoccupied property insurance.