Landlords Insurance Checklist
Whether you are a landlord of a residential property or a commercial property, Landlords Insurance should be one of the first considerations when purchasing a property. So, what is it and what should you look for in a policy?
A landlord’s risk to their assets can generally be put into three main areas, property, income and liability. Cover is available for each risk and some can be combined under a single policy to save on premium.
What should landlords consider when buying Landlords Insurance?
Let’s look at their Risk’s in details and the cover available to protect them.
Property can be the physical building or the landlords content (fixtures and fittings)
Property Insurance is the first cover a landlord should consider, building insurance will cover the repair or replacement of the building in the event of loss or damage.
Rebuilding after a loss can be expensive and take longer than you may think, see below with reference to cover your income while its being rebuilt.
Landlords income is the rent or future rent that the assets may produce
Landlords can insure for both loss of rent and rent default cover. Some insurers will also offer business interruption insurance where the building owners business also operates from one of the tenancys.
You should also consider are you required to find alternative premises for your tenant in the event of a loss, and if so for how long?
Loss of rent cover is especially important where you have a loan on the property, cover should be taken for the length of time it would take to rebuild the property and to find another suitable tenant.
The possibility of third party suffering injury or property damage because of the landlords or possible the tenant’s negligence.
Liability cover will generally be combined with property cover but can be offered as a standalone cover, in the form of public liability insurance.
Reduce Your Risk
What should landlords do to reduce their risk and therefore the Landlord Insurance Premium.
Landlords should make it part of the rental agreement for the tenants to carry their own content and public liability cover, this would reduce the landlord’s exposure in the event of a claim.
Adding smoke detectors, methamphetamine detectors and sprinklers (in the case of commercial property) will lessen the chance of loss.
Ask tenants for references and checking the references.
Choose an excess level that would be manageable in the event of a claim. The higher the excess generally the lower the premium
Landlords Insurance Checklist
Will the policy cover the replacement of the building? (If your unsure use a calculator or ask your broker)
- Do you have cover for fixtures and fittings?
- Does the policy cover malicious damage? (angry tenants or neighbours)
- Does your policy flood, where there is a flood risk?
- Do you have cover for rent default?
- Do you have lost rent cover?
- Consider your target occupancy are they covered (i.e not all insurers will cover AirBnB)
- Does the policy cover removal of debris in the event of loss (Not in all policies and limited cover in others)
- Does the policy cover landscaping, where the property has landscaped surrounds.
- What the exclusions or variations in the policy, ask what they actually mean in plain English.
Buying Landlord Insurance policy on price or by brand alone could leave you with exposures that you hadn’t planned for.
If your unsure, speak to a broker, who can more carefully consider your risk