Buy-to-let Insurance
Buying a property to let out is something that I had always wanted to do. When I recently came into some money after a close relative sadly passed away, I decided to go for it. I was relatively inexperienced and not entirely sure what do to. I had bought my own property before, but I was sure that buying-to-let wasn’t the same thing. I knew that I needed to insure it, but also knew it probably wasn’t as straight forward as looking for the cheapest house insurance deal around. After speaking to my bank and local insurance broker, I am glad that I didn’t just go online to purchase my insurance from the cheapest provider.
I had been scouring the internet for suitable properties for a while and had managed to see quite a few. After months of searching I came across the perfect investment property. A plus was it was fairly cheap as it required a bit of work bringing it up to current standards. I visited my bank to discuss a specific buy-to-let mortgage and they said that I also needed to purchase insurance. I was advised that I couldn’t purchase normal household insurance and that I needed to look for a specific landlord’s insurance policy (also know as property owners insurance). They said they could sell me a policy, but unfortunately I knew they were not independent and so could only sell their own insurance policies. I decided that I would speak to my local broker instead. As truly independent brokers they were able to offer me a range of products from the whole of the market.
When I spoke to my broker she suggested that I took out a landlord’s insurance policy and started to explain the difference between that and a standard household policy. She told me that a standard policy would not cover me for my liability to other people using your property (my tenants) and if they were injured or have their own property damaged due to my negligence, I wouldn’t be covered. What’s worse, she told me that an ordinary household policy will usually contain clauses which will not cover me if the property is let out. Therefore, it is important to ensure that I have a policy specially aimed at buy-to-lets.
I was pleased to learn that with a Property Owners policy, there are options to include rent guarantees and accidental damage cover. There are also normally options to insure my possessions, and even my tenant’s possessions. Some policies even have an option to include legal advice and representation in the event of disputes with my tenants.
She warned me to look out for restrictions in the cover whilst the property is unoccupied. There are normally reduced levels of cover if the property is unoccupied for an extended period of time (e.g. 30 days). Also damage due to normal wear and tear or poor maintenance is likely to be excluded. She also reminded me that the amount I should insure for is the cost of rebuilding the property, rather than the resale value of your property.
On her advice, I took out a landlord’s insurance policy and was really pleased. Because I went to my local insurance broker who went to arrange of insurers, I managed to secure the cheapest insurance deal available, without skimping on the cover. It has been 6 months since I bought my investment property and both my tenants and I are very happy with the arrangement. I am already looking to buying the next property and building my property portfolio. I’m a bit wiser and more experienced now. Importantly, I know exactly who to speak to when looking to insure it, my local insurance broker.
