There are a number of policies available to landlords of individual properties with the most common being the following:
When a breakdown occurs the repair will be carried out quickly and the repair cost met by the insurance company.
This type of policy includes (or can be extended to cover) central heating, plumbing and electrical systems. Some insurers allow the tenants to phone direct to the insurers in the event of a problem.
Buildings insurance does not as a rule cover the replacement of damaged contents owned by residents (except in certain circumstances). These should be covered by individual contents insurance. For example, if a water leak from one flat flat causes damage to the contents of the flat below, the items can only be replaced if both parties hold current contents policies. The party who is not at fault in any way may have to claim on their own contents insurance if the party that caused the leak does not have third party contents cover. Another difficulty is that many contents policies do not even allow for third party damage cover.
However, buying a new-for-old policy at least enables items to be replaced.
Defaulting Tenants and Voids Insurance
It is possible to obtain cover against defaulting tenants or even to insure against void months when the property remains empty but both types of policy are expensive, in particular the latter.
The former pays the rent after a predetermined period of default by the tenant until the tenant either pays or leaves and will also pay for the legal costs in removing a tenant.
If the property is being rented out for example a bank that needs it for its staff, defaulting tenants insurance is not needed. In any case there is often a cap on the amount of rent that can be claimed.
The insurance must be taken out prior to the start of a tenancy, as the insurer will ask to be involved in reference checks.
This can cover all the costs in maintaining and annually checking any gas appliance including central heating system and can also include 24-hour breakdown cover.
Home Emergency Assistance/Domestic Emergencies
Home Emergency Assistance insurance policies are very useful and inexpensive insurance products, ideally suited to landlords who need 24/7 access to a wide range of contractors. It will protect against domestic emergencies that not only affect the premises, but also the safety of the tenants.
These types of policies provide cover for the costs of dealing with domestic emergencies such as:
- Boiler breakdown;
- Plumbing issues such as breakage or failure of the sole toilet unit;
- Drainage issues;
- Electrical and gas supply problems;
- Smashed windows;
- Pest control;
- Broken locks;
- Breakdown of main heating system;
- Home security, including locks and windows;
- Loss of domestic power supply;
- Lost keys;
- Vermin infestation.
Usually the type of emergency and the definition of emergency that is covered, will be specified
Landlord Contents Insurance
This type of insurance will ensure the protection of any furnishings that are left for tenants. Theft from tenants (or their guests) could result in a substantial bill for replacing furniture and electrical items as could any furnishings damaged by a break in so landlords need to be covered too. Many new landlords assume that standard contents home insurance will provide adequate protection but this is not the case.
Most landlord contents insurance policies will provide liability insurance free of charge, an essential insurance, no matter how competent the landlord.
This covers legal costs arising from disputes with tenants as well as the eviction of tenants over unpaid rent, damage to the property resulting in tenants having to be housed elsewhere and squatters.
It will also cover all legal fees and costs incurred by a solicitor who will normally be appointed by the insurer.
More information on legal expenses insurance can be found here.
Let Property Content: High Value Furnishings
This is useful for landlords that provide high value furnishings as it will not only protect things like carpets, curtains, appliances and other fixtures or fittings and furnishings but it will also protect against damage caused by tenants.
A fairly limited policy will typically give a fixed limit of around £5,000 of cover on a new for old basis. There is no need to obtain insurance cover for any items provided by tenants as they should take out their own contents insurance prior to moving into the property. Landlords can actually insist on tenants insuring themselves against accidental or malicious damage.
Note: Landlords only need to get insurance cover for those items they have provided. There are no obligation to insure the possessions of tenants and landlords are also entitled to insist that tenants insure themselves against accidental or malicious damage.
Loss of Rent/Alternative Accommodation
This covers the cost of providing alternative accommodation for a tenant if the property becomes uninhabitable or the continual payment of rent if the tenancy terminates as a result of the property becoming uninhabitable. This may however not cover loss of rent/accommodation if the claim results from a Legionella outbreak at the insured premises, (even if the Public Liability section has been extended to cover this disease).
Public Liability covers sudden and unforeseen events. It relates to the contents, (usually up to £5m) in the event of injuries to tenants or their guests such as defective cookers, loose carpets or defective appliances. Premiums cost between £60 and £100 per year.
Rent Guarantee Insurance
Rent guarantee insurance provides protection when a tenant fails to make a rent payment on time. The rent is paid after a) a pre-determined period of default by the tenant, b) until the tenant pays or c) the tenant leaves. This kind of insurance requires the tenancy type to be that of an Assured Shorthold Tenancy (AST) of no longer a term than 12 months. The deposit taken is required to be equal to (or greater than) 1 months’ rent and a full tenant reference from an approved tenant reference provider must have been obtained. Fees that can be involved during an eviction process can be covered under the legal expenses cover.
More on rent guarantee insurance can be read here.