Why is landlords buildings insurance required?

January 29, 2012

Landlords Insurance

As a landlord, you may be wondering why landlords buildings insurance is required:

  • insurance providers typically may not see your rental property as constituting the same degree of risk as one that is owner-occupied;
  • although they may see the risks as different, perhaps overall they may see that a property being used for income generation is at a higher degree of risk than one that is used by the owner for their own personal residential purposes;
  • as such, landlord insurance exists to provide appropriate cover for the different risk profiles;
  • the moment you commence using a property for the purposes of income generation, any current owner-occupier home buildings and contents insurance may become invalid and you may be in need of a let property insurance quote and subsequently, landlord insurance;
  • this principle typically applies even in situations where you may be continuing to inhabit part of your property but are renting out the rest (even where this is as little as a single room);
  • it may be worth noting that if you purchased your asset using a specific buy to let mortgage, your mortgage contract may require you to maintain all buildings cover at all times and that may, by default, oblige you to take out landlords buildings insurance;
  • landlords cover may also offer advanced protection for your contents and your third party liabilities – the latter relates to the risk that someone may sue you as a result of damage or injury suffered due to your property and win substantial damages through the courts;
  • under the umbrella term of landlords buildings insurance, there may be a significant number of different forms of insurance protection and the position may vary considerably from one insurance providers to another – shopping around to find a degree of protection suitable for your individual situation, may only be commonsense;
  • if your property appears to be in some danger of standing unoccupied for a significant period of time (typically defined by some policies as being 30 consecutive days or more) then you may find that standard landlords cover insurance will cease to be in force and you may require what is called unoccupied property insurance;
  • landlords buildings insurance exists to protect your interests and the investment you have made in your asset – it is a subject that should be taken seriously as one day it may be all that stands between you and serious financial difficulty.
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