Buy to Let insurance sometimes termed Landlord Property Insurance, provides a building insurance policy for property that has been purchased for rental purposes. Landlord insurance can be purchased for either residential property or commercial property. A buy to let building insurance is usually based on a standard building insurance contract the perils covered will be almost identical to a standard policy but of course the insurers will note that the property is tenanted and there will be certain additional covers and restrictions on the policy wording. This form of building insurance policy is much harder to cover than an owner occupied property as many insurers do not like the “ Commercial Aspect to the risk and believe that there is greater exposure to liability claims and that tenanted property produces more claims. However that said, many insurers are quite prepared to offer landlord building insurance and it is fairly easy to obtain competitive quotations.
When becoming a landlord, before obtaining building insurance, you will need to frequent yourself with all the rules and regulations relating to letting property. There are a number of books that can help you with this matter or you may like to employ the services of a letting agent, You will need to have a current gas certificate, make sure the electrics are safe and make sure that any furniture left in the property confirms to the Fire & Furnishings regulation act. There are a number of different policy covers that come under the term landlord Insurance although cover for building is the most common. To this cover you can add Landlord Contents insurance and a number of bolt on covers. The main list of landlord insurance products is as follows.
Landlord Building Insurance
Landlord Contents Insurance
Landlord Legal Expenses Insurance
Emergency Assistance Cover
Rent Guarantee Insurance.
Landlord Buildings Insurance Cover
As mentioned above, this form of building insurance follows fairly closely to a standard house insurance policy, the range of perils covered has to satisfy the lenders handbook or else money cannot be obtained by means of a mortgage. As per usual, the lender will want their interest noted on the policy to satisfy the contract rights act. As the insurance is being arranged for a landlord, the Property owners Liability section on the. policy will also include any injury to the tenant in the property. The section under the standard insurance cover which relates to alternative accommodation is replaced by loss of rent cover. This section is usually up to 20 % of the sum insured. It must be remembered that this cover is in respect of loss of rent by peril (A fire or Flood for example) not for tenant default cover. The rating of landlord insurance depends on a number of factors as per a standard policy. Most insurers will want to know the rebuilding cost and the postcode. Another factor is the type of tenant in the property. These are usually categorised as;
Most insurers will require you as a landlord ( as does the law) to furnish the tenant with an assured short hold tenancy agreement. Certain insurers make a rating distinction between situations where the tenancy agreement is between the landlord and the tenant and a Third Party and the tenant ( such as a council or a Housing Association.
Obligations of a Landlord for buy to Let Insurance
Before you let your property, you must make sure that you comply with all the rules and regulations relating to let property.
- Repairing Covenants - under the Landlord and Tenant Act, the landlord is responsible for the up keep of the structure of the building and the installations and all services that are provided. This would of course include the gas, electricity supply, water, sanitation, space & water heating. It goes without saying of course that the building has to be fit for human habitation.
- Gas Safety - under the gas safety regulations, the landlord is obliged to have the gas installations at the building inspected by a CORGI Gas engineer. After the inspection, all remedial work has to be carried out and the tenant needs to be in receipt of a valid gas certificate. Your local Health & safety executive will be able to help you the present regulations applying to your own building
- Furniture & Electrical Equipment - there are various regulations that apply to the above. It is best to check with your local trading standards officer who will be responsible for enforcing the regulations.