Why Have Landlord Insurance?

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Landlord insurance is essential for any person renting out a property. Even with the best tenants, things can go wrong, and landlord insurance will help cover the cost of damage to a building, inside and out, as well as providing liability cover.

Plus, landlord insurance is a welcome safety net if a property owner does find themselves with a nightmare tenant, with protections including the cost of repair or replacement of contents if they were damaged due to malicious destruction.

If a tenant does not pay their rent, a rent guarantee clause can cover the lost income for up to six or 12 months.

Or if the rent cannot be charged because a home is no longer habitable, landlord insurance can cover the loss of income to a landlord, plus the charge of alternative accommodation.

If a landlord uses a third party to rent out their property, i.e., an estate agent, proof of buildings insurance or similar, it will often a pre-requisite of working with the agent.

Mortgage lenders also often insist landlord insurance is in place as part of the terms for the loan.

If the property is classed as a second home, claims are often rejected if made against a landlord’s personal home insurance rather than specialist landlord insurance.

Landlord insurance can cover a multitude of other scenarios, too, such as legal expenses, public liability if a tenant or other third party injures themselves in the property, and contents insurance.

There is also the option to add accidental damage to a landlord’s cover, to claim against destruction to contents or fixtures such as damage to a toilet, a broken window or even a red wine stain on the carpet.

Another optional extra is a landlord emergency line which can be offered to the landlord or even given as a direct helpline for tenants and property managers to gain 24/7 help and advice.

Is landlord insurance the same as building insurance?

Building insurance is not the same as landlord insurance in so far as landlord insurance encapsulates a much wider range of potential issues.

Building insurance is the main part of landlord insurance and covers the cost of repairing damage to the structure of a home and anything permanently attached to the property, as explained by Which?

Landlord insurance has a much broader scope than standalone building insurance and also typically covers non-payment of rent, liability to tenants and visitors, and damage to contents.

Building insurance generally covers damage to walls, flooring, guttering, windows, doors, the roof, patios, pavements, fences, gates, wiring and cables.

A building insurance policy will meet a claim for damage to these structural things for accidental or unexpected issues, including storm, flood, fire, earthquake, riot, theft, robbery, malicious destruction, lightning or leaks.

Meanwhile, landlord insurance is all-round protection. There are also extra add-ons such as loss of income cover if the rent cannot be collected because a property has become uninhabitable.

Does landlord insurance cover tenant damage?

Landlord insurance can cover tenant damage. There are two types of tenant damage, and each will have a different set of restrictions.

Firstly, accidental damage. This covers incidents which were just that – an accident – such as kicking a football through a window or spilling paint on a carpet. Accidental damage cover is usually an add-on to the landlord’s insurance rather than a standard clause.

The key word here is an accident: The insurers will only pay out if it was an accident, and damage made on purpose – classed as malicious – will not be covered.

Malicious damage is the same as criminal damage and is where a person intentionally harms someone’s property or is reckless enough to put that property at risk of being damaged, the Crown Prosecution Service says.

Malicious damage to the property itself usually falls under building insurance. This covers deliberate harm to the structure of a house or permanent fixtures to it. Such as a thief smashing a door down to gain entry to the building.

But malicious damage by a tenant may have to be an extra added to the premium. This is often the case for malicious damage to contents inside the house as well.

While contents insurance will protect against malicious damage by someone outside the tenancy agreement, e.g., a vandal breaking a window, it may also need to be added on as an extra for harm caused by someone living in the property. Sometimes insurers will not cover malicious damage by a tenant, for example, if the property is rented to students.

In these cases, where malicious damage has occurred, and insurance does not apply, a landlord can deduct the cost of the damage from the tenant’s deposit.

Landlords can also avoid damage by charging a high deposit, carrying out a thorough inventory before the tenancy begins, and conducting regular inspections of the property.

 

 

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