As a landlord, protecting yourself financially is likely to be very high on your to-do list when letting out a property. However, with so many insurance products on the market, it can be tricky to know what sort of cover you need. Fortunately, we’ve drawn up a mini guide to the importance of landlord insurance for those in need of a helping hand.
What exactly is landlord insurance?
Landlord insurance essentially protects landlords from some of the common financial risks associated with letting out an investment property. This covers a whole range of different forms of damage that would otherwise end up costing you money.
In what ways is landlord insurance different from building insurance?
While you may already have some kind of building insurance that covers the financial costs for potential loss or damage due to unexpected events such as floods or fires, it is not likely to cover events such as malicious or accidental property damage by tenants. In this way, landlord insurance is important if you want to make sure you are prepared for all kinds of adverse events.
What else does landlord insurance cover?
Landlord insurance does not just cover the property damage itself. Many landlord insurance policies also include a provision in case rent is lost while a property is damaged and untenable. An insurance policy specifically for landlords may also cover the loss of rental income if a tenant defaults on payments or absconds.
How likely is it that I will actually need landlord insurance?
If you’re a natural optimist, it can be tempting to think that building insurance is adequate to protect you from any serious financial setbacks. However, adverse events can and do happen, and opting for insurance specially tailored for you can be a very smart move.
Indeed, even the most honest and well-meaning tenants can have accidents or struggle with their rent from time to time. While they may have a shining reference letter when moving into the property, you simply cannot predict how the tenancy is likely to proceed. They may suffer from an illness, lose their job or go through a relationship breakdown, which could ultimately cost you money.
Opting for landlord insurance does not have to be expensive and could save you from serious financial difficulties in the long term.