Buy-to-let property insurance, some times also known as residential property owners insurance, is needed if you own houses and/or flats to tenants – either on a short-term or long-term basis. Ordinarily you can buy cheap buy-to-let property insurance in the event that you rent five or less properties in the UK than is the case if you rent more than five properties, as in the case of the former you are seen as a small time landlord with a small business, whereas in the latter you are seen as a full blown property-owning company.
Whether you plan to rent five or less properties, or five or more properties, is, however, a side issue, as in both cases you’ll need to ensure that you have at least the minimum level of required insurance in order to protect yourself. Consequently, the number of properties you own will have a bearing only insofar as the insurance premiums are concerned.
That said, if you are looking to become a property owner with a letting business, then you need to ensure that you have the following minimum provisions in your insurance policy:
Fire
Insuring against any fire on the property
Natural Disaster (also known as tempest insurance)
Insuring against natural disasters that may occur, such as a storm where the winds tear off your roof or guttering
Theft
Which is especially important if you are renting out fully furnished properties. In the event that you are renting out unfurnished premises, you may wish to have a discussion with your tenants about whether or not they should have home contents insurance
Public Liability Insurance
This should be a must as it will protect you against any claims your tenants or any third parties (such as their guests) may have for injuries they suffer while on your property
Lost Earnings
There may well be times when your property remains empty; say, for example, while you look for new tenants. If you are relying on the rental income from your tenants to repay the money you borrowed to purchase the property, you need to ensure you have lost earnings insurance to compensate you during this period
Employee Liability Insurance
If you have employees who will visit the property for you to repair any damage, etc. or to collect the rental payments, then you need to make sure that you have employee liability insurance in case they get injured while carrying out their assigned task
Legal Expenses Insurance
As a property owner you may find the need from time to time to retain the services of a lawyer; for example, if your tenants refuse to pay their rent or move out of the property at a specified agreed time – when you may need to get an eviction notice. As legal expenses in the UK can be expensive, you should consider insuring against this risk by having in place a provision of legal expenses in your insurance policy.
Although the above are basically the bare minimums you need in your buy-to-let property insurance policy, you can also tailor these types of insurance policies to meet your particular needs, so make sure that you talk through your circumstances with your insurance provider, especially if you anticipate expanding the business in the near future.
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