Insurance for Landlords

Over the years, one of the most common things I've seen landlords misunderstand is the extent to which they are insured. Of course, they don't realise this until the point of claim, and by that point it's too late. The situation isn't helped by insurers using very similar terms to describe very different things. I've tried on a number of occasions to simplify this for my landlords but given that problems still occur, I've clearly not been that successful! I'm hence going to give it another go here. Equally, we (Belvoir) sell insurance and it's actually really good. We've always tried to not be pushy regarding this, but I'm going to sell the benefits here as I'm aware of how many landlords choose rubbish cover and regret it later.

Buildings Insurance

• "Landlords" buildings insurance is not the same as buildings insurance on a property you live in yourself. "Landlords" buildings insurance has an element of public liability cover in it. So if a tenant falls downstairs and makes a claim against you, your "Landlords" buildings insurance will cover you, whereas a normal domestic policy won't.
• Some policies also cover "loss of rent". This will be following an incident such as a flood or a fire. It's unlikely to cover rent when a tenant doesn't pay it.
• A cheap policy will exclude cover for any damage the tenant causes, or anything their pets do.

Belvoir's buildings insurance policy is comprehensive in terms of what it covers - you can't buy it on the high street - it's available to our landlords only and includes:

• automatic contents cover (up to £5,000)
• cover for up to 120 days of the property being unoccupied.
• damage by the tenant.
• damage by pets.
• following an 'incident', loss of rent and the cost of re-letting.

Rent and Legal Expenses Insurance

• Often referred to as Tenant Default Insurance.
• Covers you if the tenant doesn't pay the rent. 
• Covers your legal / court / solicitors costs in getting rid of that tenant. 
• Carries on paying 75% of the rent for 2 months after the eviction and whilst you relet.

Belvoir's Rent and Legal Expenses Insurance is again very good quality cover - it does exactly what it says with very few restrictions. Common areas of misunderstanding are:

• "I can get a cheaper policy elsewhere". Actually you can get a free one if you search hard enough, but if you think you're comparing apples with apples, you're being optimistic. You get what you pay for, and as anyone who's needed to claim will testify, £130ish per annum per property is cheap. 
• "I'm already covered under my buildings policy". Possible, but highly unlikely. Your buildings policy will pay your rent following an insurable incident (eg a fire). It won't pay simply because your tenant hasn't.
• "But my tenant's been OK so far". A couple of landlords cancel cover each year for this reason. But then what if the tenant loses their job, or the couple in the property split up and one moves out? It's like saying you don't need cover for flood because it's not raining at the moment. 
• "If they can't pay the rent, they'll just have to leave". Yes, but it can take several months to make that happen if the tenant isn't co-operative. And the costs of eviction from someone like Landlord Action can be close to £1000, and in the meantime 4 months of no rent at £600 a month is £2,400. Evicting a non payment tenant is not a cheap business.