What is buy to let insurance?
Since the boom in buy to let properties being bought in since 1996 and with the current policy’s pushing for more buy to let investors this growth is set to rise even more throughout the UK.
Buy to let insurance is designed to protect landlords against the risks associated with letting a property out.
So what makes buy to let insurance different to standard home insurance?
Renting out your property to a tenant always requires a different kind of cover to that of a standard home insurance policy. Although the building is still covered on both types of insurance policy, additional extras can be included in the policy’s to cover other areas. One of these areas is loss of rent cover which gives you the financial security if something was to go wrong with your tenant paying the rents to yourself and intern protects your investment.
Types of tenants?
One important aspect you need to be aware of is the type of tenants you are giving your property to. You need to ensure that the tenants are going to look after the building the same as you would. To ensure this we do recommend a full vetting process that checks various aspects to ensure suitability.
Below are some of the types of tenant you might come across:
· Professional Let – A working individual or couple that pays the rent directly
· Students – People that have gone on to higher education
· DSS – Individuals or couples on housing benefit that the council pay there rent on behalf of the tenant.
The benefits to buy to let insurance
Here are the main features of cover to look out for on a buy to let insurance policy:
· Property owner’s liability-This is one of the most important things you can insure as a buy to let landlord. It’s your responsibility to ensure the maintenance of your property. If a third party, or their property, is subject to loss, damage or injury following an accident on, or linked to, your premises, you may legally be required to pay compensation. If this is the case, buy for let insurance can cover these expenses.
· Buildings insurance-The trickiest part of insuring your building is calculating the right figure to insure it for. If you overestimate you will pay a higher premium unnecessarily, but if you underestimate your insurer may not be able to meet the full cost of repair. What’s important to remember is that you are insuring for the rebuild value of the property, not the purchase price.
· Alternative accommodation -This cover applies if an insured peril, such as a fire, prevents your tenant from inhabiting the property. Part of your responsibility as a landlord is to provide alternative accommodation for the time where the building is not liveable. The insurance will therefore cover the cost of this accommodation while repairs are carried out. There is usually an upper limit on claims of this nature, with Towergate it is 20% of your total sum insured.
- Loss of rent-This cover is also applied when an insured peril causes the building to be inhabitable. As your tenant cannot be expected to pay their rent during a period where the building cannot be lived in, the cover allows reimbursement of up to 20% of your sum insured in rental income you would have received. Most insurers will provide a similar cover.
If you are looking to invest in a buy to let property. We can offer you an helping hand to guide you though the whole process. Offering services from property sourcing, property management and even buildings solutions.
Why not come in for a chat in our offices in Bentley, Doncaster where you can find us on the high street or you can call us on 01302 822847 for more information.
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