When you purchase a property, you are expected by law to obtain suitable buildings insurance to cover the cost of a rebuild should the worst happen. However, despite letting agents recommending buildings and contents insurance for landlords, many buy-to-let property owners believe that paying for insurance, especially for a property they don’t occupy, is a waste of money. On the contrary, it is always advisable to have insurance, even on a property you’re not living in.
As we mentioned above, if a landlord has a mortgage on a property (as many do), they are required by law to also take out suitable buildings insurance to cover the cost of rebuilding the property should it be required. Many mortgage providers are now actively auditing landlords looking to purchase a property to ensure they have a buildings insurance policy. If a mortgage provider finds evidence that a landlord doesn’t have an active buildings insurance policy, that landlord could be faced with a mortgage termination, or have insurance purchased for them and the cost added onto their mortgages with administrative charges.
If a landlord is renting out an unfurnished property, it is still advisable to obtain insurance to replace the curtains, white goods and carpets if required; some buildings insurance policies will include a small level of contents insurance, but it’s always best to check first, and ideally obtain a separate contents insurance policy.
Buildings insurance is required by mortgage providers; however, contents insurance is optional. Buildings insurance will typically cover any fabric or structural damage to the property from incidents such as burst pipes or fires. Contents insurance covers items you include in your inventory; for example, if you let out a property with a flat screen TV, and it’s damaged by the tenant, this will be replaced under your contents insurance policy. Landlords should ideally have both forms of insurance to ensure their property and its contents are protected.
In addition, some landlords also take out landlord’s insurance, which provides third-party liability cover, protecting landlords from compensation claims should someone be injured, or worse killed, while in the property; the policy also protects against damage to the property by tenants, their visitors, passers-by and even tradesmen. Some landlords also take out a range of optional insurance policies, including cover for legal fees in the event of an eviction and rent guarantee insurance to cover the cost should a tenant fail to pay their rent.
Landlords need to remember that their insurance policies will not cover the possessions of their tenants because the insurance has been provided to the landlord and not a third party. Tenants are advised to take out their own contents insurance policy, but are not legally obliged to. Landlords should also take note of the conditions of insurance to ensure that any cover is not lost.
As the largest letting agent in Cardiff, we have helped thousands of landlords over the years with issues from insurance to Rent Smart Wales. If you’re a landlord in Cardiff looking for some clarification on insurance or any other buy-to-let matter, speak to our experienced lettings team today on 02920 668585, email firstname.lastname@example.org or pop into our Cathays branch on Woodville Road, Cardiff today!