Buy-to-let Landlord Insurance
Buy-to-let landlord insurance provides landlords with the essential components to ensure that their investment is adequately protected.
To adequately protect your investments, it's necessary to examine the risks that are open to you. The buy-to-let market takes in many different forms but those of you who have bought off plan apartments, will know that generally the managing agent will insure the development and then charge back the cost of the buildings insurance on a pro rata basis. This then means:
First, if you don't have buildings insurance, then this is definitely for you. Second, if you rent fully furnished, then the contents are yours and will need to be covered in the event of flood, fire, damage etc.
Third, you'll need to cover yourself in case the tenant has an accident and wants to claim from you.
Here are some salient points about
Buy-to-let landlord insurance:
1. You only pay for what you'll get back. In other words if you underestimate the cost of the rebuilding a property in the event of a total loss, then you only be paid out on a percentage of the amount insured. eg. if the property is worth £200,000 and you declare that the buildings sum insured is £100,000 and then submit a claim for £10,000 you would only get paid out £5,000 as you would have under insured. In other words: buy cheap, buy twice!
2. Properly insured, you may be able to help protect your income stream.
3. The contents that belong to you would be covered under buy-to-let landlord insurance. You won't be able to insure for the tenant as well as the goods won't be owned by you - the tenant will be liable for their own insurance. As a benevolent landlord, it should be up to you to provide a good level of security for your tenants. Most new build and modern properties will be pretty bullet proof on this but older properties may need some security enhancements. Your local Crime Stoppers should be able to help here.
4. Many insurers also insure communal contents which will cover contents such as those names above which are situated in communal areas in blocks of flats, or properties with multiple types of tenants.
5. Regular household insurance does not cover businesses: if you make a claim on a regular household insurance policy, the insurer won't pay out as buy to let is classed as a business.
6. Some scenarios:
~ The washing machine floods. (how many floors up are you? How many people will claim off you?) ~ The bath overflows. ~ The roof leaks and causes damage. ~ The drains collapse ~ There's a fire...
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