Why insurance for landlords is important

December 6, 2011

Landlords Insurance

It is hopefully safe to assume that the case for having insurance on your property and contents does not need to be made.  What sometimes is questioned though is why insurance for landlords is necessary, as opposed to standard owner-occupier cover:

 

  • to begin by clarifying a point on landlords – you do not need to be fully occupied, full-time in renting out property to be designated as a landlord for insurance purposes, in fact, even if you only rent out a room of two in your property during the holiday season then you will have become a landlord;

 

  • if you are renting out property or even a small part of your own property, you are effectively using it for commercial purposes and income generation;

 

  • owner-occupier home buildings and contents insurance is designed to cover the risks typically associated with domestic use of a property and not those that may be associated with commercial use – i.e. renting;

 

  • insurers typically regard a property that is being used for purposes of income generation through rental, as being at higher risk, in certain categories, than a property being used exclusively for domestic purposes;

 

  • as a result, owner-occupier policies will typically become invalid if you start to use your property for rental purposes;

 

  • insurance for landlords is the appropriate cover for landlord purposes – in fact, if you have a buy-to-let mortgage, your lender may insist on its use to protect the building they have advanced money against;

 

  • there are variations in the cover provided by typical landlords insurance policies and it may be advisable to look at a number of options before deciding what is the best landlord insurance for you;

 

  • remember that in the event of taking out a policy or making an insurance claim, if you intentionally misrepresent the occupancy status of your property, the consequences may be significant – including the rejection of your claim, your listing as someone who makes false declarations and in some cases, your action may result in a prosecutable offence;

 

  • given that the total amount of money that you have invested in your property and business, looking for appropriate insurance for landlords appears to be only commonsense.
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