What does let property insurance cover? Apr 4th
Let property is not the same as owner occupied property. The difference is clear and simple – you have tenants occupying a let property, rather than living in the home yourself.
The distinction is important since the use of the property is taken into account by insurers when calculating the risks. These are written into a specialised landlord insurance policy, which is different to a standard home insurance policy – so different that if you have only the standard home insurance policy, yet have tenants in your property, your insurer may decline to settle any claim for loss or damage.
What is covered?
So, what does let property insurance – or landlord insurance, as it is also known – actually cover?
The building
- your principal asset as a landlord is the building itself and the structure and fabric of that building needs protection against such potentially major risks as floods, fire, escape of water, impacts (from vehicles or falling objects such as trees, branches and aircraft), theft and vandalism;
- the total building sum insured anticipates a worst case scenario in which the building is destroyed and needs to be completely rebuilt – the cost of reconstructing differing from whatever sum you might paid for the property or its current market valuation;
- reconstruction costs change over time, of course, and so the best landlord insurance policies keep track of those changes by index-linking the total building sum insured – although it is sensible to evaluate current reconstruction costs at least every five years, suggest the Royal Institute of Chartered Surveyors (RICS) and the Association of British Insurers (ABI);
The contents
- although your tenants are of course responsible for insuring their own possessions, you may also own contents in the let property – especially if the accommodation is let furnished and also in common areas and entrance halls;
- landlord insurance typically provides cover for those contents you own and may be tailored to protect a higher or lesser value (for example, if you only have carpets and curtains to insure);
Landlord liability
- in your capacity as landlord, you have a duty of care towards your tenants, their visitors, neighbours and members of public;
- that means you must take every reasonable precaution against their being injured or having their property damaged – and if that does happen you may be held negligent and ordered to pay a substantial sum in compensation;
- since the claims of this nature may involve large sums, it is usual for landlord’s insurance to provide indemnity of at least £1 million;
Loss of rental income
- if a serious insured event occurs, your let accommodation may be temporarily unusable by your tenants until repairs or reinstatement have been made;
- during that period, therefore, you are going to lose the rental income you may otherwise have enjoyed;
- let property insurance typically provides for compensation for such loss of rental income – and the maximum amount payable is typically limited either by a total amount payable or by a given proportion of the sum insured.
These are the most common elements of let property insurance, although you may also be offered optional extras, such as lost key replacement, trace and access cover when repairs need to be made or home emergency insurance (to cover the breakdown of essential appliances).
Apr 4th
Let property is not the same as owner occupied property. The difference is clear and simple – you have tenants occupying a let property, rather than living in the home yourself.
The distinction is important since the use of the property is taken into account by insurers when calculating the risks. These are written into a specialised landlord insurance policy, which is different to a standard home insurance policy – so different that if you have only the standard home insurance policy, yet have tenants in your property, your insurer may decline to settle any claim for loss or damage.
What is covered?
So, what does let property insurance – or landlord insurance, as it is also known – actually cover?
The building
- your principal asset as a landlord is the building itself and the structure and fabric of that building needs protection against such potentially major risks as floods, fire, escape of water, impacts (from vehicles or falling objects such as trees, branches and aircraft), theft and vandalism;
- the total building sum insured anticipates a worst case scenario in which the building is destroyed and needs to be completely rebuilt – the cost of reconstructing differing from whatever sum you might paid for the property or its current market valuation;
- reconstruction costs change over time, of course, and so the best landlord insurance policies keep track of those changes by index-linking the total building sum insured – although it is sensible to evaluate current reconstruction costs at least every five years, suggest the Royal Institute of Chartered Surveyors (RICS) and the Association of British Insurers (ABI);
The contents
- although your tenants are of course responsible for insuring their own possessions, you may also own contents in the let property – especially if the accommodation is let furnished and also in common areas and entrance halls;
- landlord insurance typically provides cover for those contents you own and may be tailored to protect a higher or lesser value (for example, if you only have carpets and curtains to insure);
Landlord liability
- in your capacity as landlord, you have a duty of care towards your tenants, their visitors, neighbours and members of public;
- that means you must take every reasonable precaution against their being injured or having their property damaged – and if that does happen you may be held negligent and ordered to pay a substantial sum in compensation;
- since the claims of this nature may involve large sums, it is usual for landlord’s insurance to provide indemnity of at least £1 million;
Loss of rental income
- if a serious insured event occurs, your let accommodation may be temporarily unusable by your tenants until repairs or reinstatement have been made;
- during that period, therefore, you are going to lose the rental income you may otherwise have enjoyed;
- let property insurance typically provides for compensation for such loss of rental income – and the maximum amount payable is typically limited either by a total amount payable or by a given proportion of the sum insured.
These are the most common elements of let property insurance, although you may also be offered optional extras, such as lost key replacement, trace and access cover when repairs need to be made or home emergency insurance (to cover the breakdown of essential appliances).
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