The Importance of Specialist Let Property Insurance

So, what’s included under a comprehensive Let Property Insurance policy?

A key section of cover is protection for thestructure itself. This includes walls, roofs, and permanent fixtures and fittings like fitted bathrooms or kitchens.

Property Owners Liability is another important aspect which indemnifies you should a third-party claim against you in connection with a failure in your duty of care as owner of the property. For example, if someone trips and injures themselves whilst in your property and you can be held as having acted negligently in causing their injury.

Landlords also have the option to insure Landlord’s Contents within the property, including the furnishings, electrical appliances, curtains/blinds,
and carpets, in situ for use by the tenant.

However, one of the most important features of a Let Property policy is coverage for lost rentalincome (or temporary alternative accommodation
costs) following an insured event. This is applicable if your property becomes uninhabitable following an insured incident, such as a Fire or an Escape of Water, meaning the tenant must vacate.

Your buy-to-let property might become vacant for various reasons, for example, renovations, general repairs, or simply a vacant period between tenants. Some insurers will look to restrict cover during such periods due to the perceived increased risk associated with an empty property. It is, therefore, important to consider a policy that offers full cover for extended periods. It is also important to consider a policy that doesn’t have optional extras/ charge extra premiums for essential protections like accidental damage, malicious damage, or theft by tenants.

One of the most common reasons for property insurance claims is water leaks, so consider a policy that not only offers a reasonably low excess for such incidents but also includes ‘Trace and Access’ cover as a standard feature, and with a realistic limit. ‘Trace & Access’ covers expenses incurred in locating the source of a leak which may be hidden beneath floorboards, concealed behind bathroom tiles or behind walls.

Ensuring that your Buildings and Landlords Contents are insured for the correct amount is your responsibility. A Let Property should be insured for its Reinstatement Value (the cost to rebuild), as calculated by a Chartered Surveyor. Failure to insure in this way could result in underinsurance, which in turn could lead to claim payments being proportionately reduced by the proportion of underinsurance due to a little-known policy condition known as the ‘average’ clause. As an example of this, should you either deliberately or inadvertently insure your Let Property for say 75% of the Reinstatement Value, you risk the insurer only settling 75% of any claim costs submitted.

Landlords Contents should be insured for their replacement value on a new for old basis. This means, for example, that a 10-year-old bed can be replaced by a new bed of similar quality and standard, but not by a bed of better quality and standard. This should be factored in when arriving at appropriate level of Landlords Contents cover required.

Index Linking is essential to ensure your Sums Insured remains accurate. It increases the Sums Insured each year to account for inflationary type increases to building materials, labour, and RPI, amongst other things. This provision provides additional protection from the perils of underinsurance but does not negate your obligation to insure correctly in the manner outlined above.

While a landlords policy provides cover for many insured perils, it is also crucial to know what is not covered. Your policy will not cover things like your policy excesses, damage resultant from gradual wear and tear, maintenance matters, or your tenant’s possessions.