Becoming a landlord can be an exciting time but renting out property is never going to be a risk-free activity. Only the luckiest of landlords never encounter rogue tenants or avoid a few unintentional accidents that nevertheless cause costly damage.
Putting some money aside for repairs and accidents is vital for any landlord’s budget but sometimes the issues that arise can be far costlier than previously imagined. This is where comprehensive landlord insurance can be invaluable and below we explore just why this is the best route for landlords to take.
What Do You Need Cover For?
There’s various types insurance cover for home owners and Landlords may need cover for short term lets, contents, loss of rent and buildings.
You may already have buildings insurance and feel that this is enough cover for what is essentially a small business. However, buildings insurance while required by all homeowners is not specifically tailored to deal with the other issues that can arise from renting a property.
Loss of Rent
One of the biggest potential hits for a landlord is loss of rent, which is covered by a good landlord insurance policy, helping in cases where renting a property is proving difficult or tenants have defaulted on rent.
Contents cover is another type of insurance to consider and this will largely depend on the type of dwelling and the state it’s in at time of renting. If you’re renting a high-spec home complete with brand new furniture and appliances, then it might be for best to insure yourself against damage. If, however, you’re not renting a fully or part-furnished place then you can decide against it whilst advising your tenants to take out cover for their own belongings.
Short Term Lets
The type of lets on offer at your property may also ultimately influence how you feel about landlord insurance. Short-term lets are likely to incur more damages as tenants will have a feeling of ‘passing through’ compared to long-term lets where tenants are looking for a comfortable and homely environment.
Student tenants can present with issues like short-term tenants as parties can sometimes get out of control. Knowing the type of tenants, you’re targeting and realistically assessing potential for damage and breakages will provide the best picture of whether you should get landlord insurance. There are policies that cover all types of tenants if you’d rather not limit who can live in your property.
Landlord insurance becomes even more important if you’re a landlord to multiple properties and rent profits are your main source of income. As the number of properties, you rent out increases (coupled with renters) the probability of something going wrong exponentially rises, exposing you to potential costs that are far beyond the odd repair.
It’s important to get to know what you’re legally liable for and try to see if your budget and monthly income would be able to deal with disasters like a fire or a flood.
Chances are that you won’t be able to afford to deal with something like that with savings alone so it’s important to take realistic stock of finances to avoid future financial problems.
Every landlord starts their journey hoping that they’re matched with fantastic tenants and a property where nothing ever goes wrong, but this is simply unrealistic and it’s important to protect your property and finances in the best way possible.