Insuring buy to let investments – good value for money or not?
It is a statutory requirement for landlords to insure the freehold building for all Buy 2 Let dwellings. But with the increasing costs of mortgages plus more and more legislation over deposits and safety matters particularly with the Housing Health and Rating System (www.communities.gov.uk/hhsrs) will you maybe tempted to try to save money choosing cheaper insurance?
Demand for Buy 2 Let dwellings continues to increase with pace and with it so are the risks! The number of migrant workers is growing rapidly. Many of these people do not speak or read English fluently and many have very different cultural standards, which may affect how they live and how they use the dwelling.
All landlords should insure to protect themselves and their asset from a claim in respect of their legal liabilities to their tenant, their agent or any visiting contractors. This list represents some of the important points a policy should cover protecting you and your investment:
- injury to your tenant, a visitor, a contractor or a third party
- accidental damage caused by the tenant a visitor or a contractor
- malicious damage caused by tenant or caused by a third party
- rent if the dwelling is rendered uninhabitable due to an insurable incident
- legal expenses relating to physical possession of the property
- legal expenses relating to disputes over dilapidations
- legal expenses relating to tenants causing a nuisance
- legal expenses relating to disputes over repairs and renovations
- legal expenses relating to disputes over health and safety
Many standard policies exclude malicious damage by tenants, accidental damage by tenants, cover for your furnishings, and are restricted cover when the property is empty between tenants.
Check to see if your letting agent is Authorised or Regulated by the Financial Services Authority in the mediation of general insurance. If so, like Belvoir Lettings agents, they should be able to provide you with advice to introduce or sell you suitable insurance cover for your rented property .
In my next article I will go into how you can insure yourself against the tenant defaulting on their rental payments.