There is a myth commonly assumed by novice property investors that landlord’s insurance is an unnecessary expense. However, like most things in life, hindsight often makes us reconsider the choices we might have made earlier. The fact is, insurance for landlords is an absolute essential for all but the most successful of investors, because it is only the latter that can rely on an extensive portfolio of assets to get them out of trouble when things go pear-shaped.

The rest of us need both the consistency and certainty of rental income and positive cash-flow to keep the wolves from the door – and speciality landlord property insurance achieves that for us, even when all else fails.

While some may opt to have the additional protection afforded through rent guarantee and legal expense policies, all landlords should have adequate buildings insurance to deal with unexpected and potentially catastrophic events that could seriously impair or devastate a property income strategy.

New landlords often make the mistake of assuming a standard domestic policy will cover all eventualities. But this is far from the case. Most domestic buildings policies do not offer the landlord sufficient cover for tenancy events. They rarely provide cover for extensive void periods and may not offer indemnity liability protection, which is essential to protect against possible damage claims by the tenant(s), their guests or any tradesmen the landlord employs to work on the building. And in any event, many domestic policies strictly prohibit property letting or sub-letting.

A special landlord building insurance policy addresses these issues and provides the investor with complete peace of mind.

In addition, in the unfortunate circumstances of a serious fire or flood occurring, special building insurance for landlords also ordinarily provides financial assistance that pays for the tenant(s) to move into suitable alternative accommodation while repairs are undertaken. Without this type of cover, the landlord may not only find himself suffering from a lack of rent coming in, but also a bill from the tenant(s) for temporary alternative accommodation, which the landlord is invariably liable for.

In the same way, standard domestic contents insurance can prove expensive for a landlord, because it usually covers an excessively high value amount of furnishings. Most landlords supply only the essentials in rented properties – and speciality landlord content insurance is tailored to their needs, offering incrementally small value amounts while providing extensive accidental, malicious-event and tenant-damage cover.

Property investors who own leasehold apartments or houses should pay particular attention to the need for separate landlord buildings insurance, in addition to the wholly inadequate and ineffective cover commonly provided as a mandatory element through management or service charge fees. This style of block policy usually only provides protection against damage events associated with common parts, such as from and to a stairwell or roof. So for example, the more common occurrence of a tenant leaving the bath tap on unsupervised and consequentially flooding the apartment below would not usually be covered. The same goes for a burst water pipe, leaking washing machine or a dripping cold-water tank.

The only effective protection for property investors against these and other potentially ruinous rented property events is to have adequate and specialised insurance designed specifically for landlords and the dwellings they let.

About the Author

Clive Andrews

Clive Andrews is a journalist in the financial sector, always looking for new ventures.