You might be a landlord looking to make a living from your buy to let properties or perhaps you are a so-called “accidental” landlord with a property that has come your way and you have decided to let to tenants at least for a while.
Either way, buy to let insurance is an essential method of protecting your property – and the business you are effectively running from it – against many risks and perils.
Why do I need specialist buy to let insurance?
If you previously lived in the property you have decided to let or you have inherited such a home, you are already likely to have arranged standard residential insurance to protect the property. Why can’t you simply continue this cover once your tenants move in?
The essential difference between a home you live in and one you let is that the latter is a business – based on the income you are generating from the rent received from your tenants.
That exposes your property to a different set of risks, which must be notified to your insurers, who are almost certain to insist that you have purpose-designed buy to let insurance. The standard residential insurance you had when you lived there is unlikely to cover all of those risks and may in fact lapse if it comes to light that you are using owner-occupiers home insurance for a let property.
Does buy to let insurance affect my mortgage?
If you used a standard residential mortgage to buy the home you once lived in, you may need to remortgage the property and arrange a buy to let mortgage if you intend to let the property to tenants.
Just as with your standard mortgage, any buy to let mortgage lender is almost certain to insist that adequate buy to let insurance remains in place at all times – including “voids” when no tenants are living in the property.
What are the main differences between insurance for owner-occupiers and landlords?
The main differences between the two different kinds of insurance stem from the fact that own and are operating a let property as a business. Therefore:
indemnity against your liabilities as a landlord are paramount – if a tenant, one of their visitors, or a member of the public suffers an injury or has their property damaged through some contact with your property, you may be held liable;
in that event, you may be sued for a substantial sum in compensation – and landlord liability indemnity insurance (typically incorporated into buy to let insurance) provides a necessary defence;
some buy to let insurance policies may also offer cover for malicious damage to your property caused by your tenants; and
because the business you are running relies on the generation of rent, buy to let insurance may also offer compensation for loss of rental income if a major insured event results in the property becoming temporarily unlettable pending repairs and reinstatement.
Just as with other forms of property insurance, buy to let insurance also offers protection against risks to the structure and fabric of the property, thanks to an element of building insurance. If required, it may also protect against loss or damage to any contents you own in the let property.
Does buy to let insurance continue through rental “voids”?
When there is a significant lapse of time between tenants moving out and new ones moving in, you lose out on rental income, of course.
But your let property then also becomes more vulnerable to a range of additional risks. Most insurers, therefore, restrict the scope of cover provided once the property has been unoccupied for longer than 30-45 consecutive days or so – the exact period varying from one insurer to another.
To ensure that adequate protection is maintained – and that you are complying with the conditions of your buy to let mortgage by ensuring continued cover – therefore, you may need to arrange specialist unoccupied property insurance.