Are you a would-be property investor with your sights set on the buy-to-let property which will one day blossom into a booming portfolio? If so, you likely know by now that there really is no such thing as passive income.
Landlords have a veritable cornucopia of considerations when it comes to generating an income through property, whether it’s ensuring that the property is safe and well maintained to ensuring that your tenants are properly screened and remain the same pleasant and reliable people towards the renewal of their tenancy as they were when you first interviewed them. Yet, there’s one consideration which absolutely must not be overlooked… Landlord’s Insurance!
Here we’ll look at why an appropriate home insurance policy is one of the most important ways in which you can protect your investment, your tenants and your nascent career as a property magnate…
What is landlord’s insurance?
Landlord’s insurance is a form of property insurance that covers your property from the kinds of losses that may be associated with letting your property out to private tenants.
The policy will usually protect the building, although you can also adjust it to include any valuable contents contained within the property if you choose to let it out on a furnished basis. It tends to cover one against damage from fire, flooding, land subsidence or extremes of weather as well as theft and malicious damage.
So, I need it then?
Absolutely! Unfortunately, with so many policies out there, many first time landlords make the mistake of choosing the wrong policy. This can leave them with inferior cover or excessive costs diminishing their profit margins.
Choosing the right policy
The right policy for you depends upon your needs as a business person and the needs of the property.
Needless to say, it’s your legal responsibility to ensure a safe and hazard-free living environment for your tenants so your policy must at the very least facilitate that in the event of an accident.
If you want to pack your property with gorgeous furniture and the latest mod-cons to attract an affluent and professional tenant this is understandable, but it’s a good idea to insure your contents if you deem the contents of your rental property valuable.
That said, buildings and contents home insurance policies can be costly and eat into your profit margins. You’re in this to make money, after all, and insurance is an overhead cost that can turn a lucrative property into a money pit if you choose a needlessly expensive or comprehensive policy.
A price comparison is absolutely essential to ensure that you get the cover you want at a price that’s conducive to your profits.
Aside from the property’s contents the location of the property is a key consideration as is the type of property.
A policy on a city centre apartment in a major conurbation will likely differ from the cost of a policy on a bungalow in a leafy suburb.
Local crime rates, incidences of weather related disasters and the vulnerability of a property (e.g. if it is situated close to a river that has a history of bursting its banks) are all contributing factors in a policy’s cost.
Moreover, those wishing to rent out property in Ireland may find policy costs a little higher than in the UK. This is because they tend to be subject to Irish property taxes which tend to be folded into the costs.
As with many things, Brexit may change the logistics of renting Irish property from the UK.
While you may need some time to calculate the right policy for you, it’s safe to say that Landlord’s Insurance is a no-brainer!