Posted on: 31 July 2020
The covers that will help you protect your investments
Whether you are a commercial or residential landlord, you will want to ensure the investment you have made into your property is protected.
Take a look at the insurance covers that we have identified as being essential for a property owner.
Essential covers to protect your property
1. Buildings insurance
Protecting the building itself will probably be the most important cover for you as a property owner, as this is the insurance cover that looks to protect the building that you own. If you don’t have a building to rent out, you don’t have a form of income.
Buildings Insurance can cover the structure of the building, underground service repairs and removal of debris following an insurance event. Buildings insurance can also cover the cost of professional fees, such as architect’s or surveyor’s fees. To be covered against certain insured events, you will need to make sure that they are specified in your policy.
Buildings insurance is a frequently underinsured cover, which means that in the event of a disaster, the amount paid in a claim might not cover the cost of getting your property back to how it was before the claim. To avoid this, make sure that you give accurate and up to date information, such as the reinstatement value of your property and potential rebuild costs, to your insurance broker or provider. You should consider obtaining a reinstatement valuation from a professional valuer to assist in this process.
As the landlord, responsibility for buildings insurance will usually fall onto you, as it is your property. If you want to defer the responsibility of the insurance to your tenants, make sure this is clearly stated in either a written contract or the tenancy lease.
Buildings insurance isn’t a compulsory cover, but you should consider the consequences of both a partial or total loss when it comes to your building assets.
2. Property owners’ liability
This cover is designed to cover you against a compensation claim if someone is injured on your property as a result of your negligence. This cover can protect damage to third party property as well as injury.
The classic example would be if a tile fell from the roof of your property onto a visitor’s car, they could claim against you for the damage to their car.
Whilst Property owners’ liability could be for any landlord, this type of cover is particularly important for commercial property owners, where there is the potential to have more visitors to the premises.
3. Loss of rent insurance
There could be several reasons that your tenants fail to pay you rent, but the result is still the same; you are losing your income. A fire or flood could render a property uninhabitable or your tenants could be unable or refusing to pay rent.
Loss of rent is designed to protect your income when your tenants are unable, or won’t, pay rent. Loss of rent insurance ensures that you receive the regular payment that you would normally receive from your tenant until your rent payments are reinstated.
You should check what your loss of rent cover will reimburse you for. If your building experiences a fire and is uninhabitable, your insurance will likely cover this, whereas if your tenant is only experiencing temporary cash flow problems, this loss of rent is unlikely to be covered, as you will still receive payments, just at a later date.
4. Contents cover
If you are renting out your property furnished, you may want to consider contents insurance to protect your belongings. You may offer to have some furnishings in the property for your tenants, but these could be damaged, destroyed or stolen during the term of the tenancy, leaving you with a financial loss.
There are many different types of items that you could leave for your tenants, regardless of the type of property, such as desks, ovens, TVs or chairs, all of which could be covered under a contents insurance policy.
Whilst you are not obligated as a landlord to provide furniture to your tenants, you will usually have some kind of fixtures or fittings in the property. The classic example of the difference between fixtures and fittings and contents is if you imagine a house that has been turned upside down. As a rule of thumb, anything that has dropped down would be classed as contents and anything that stayed where it was would be fixtures and fittings. This could include things like electrical sockets or light fixtures.
You should also think about your contents in communal areas as these will need insuring.
5. Commercial Legal Insurance
A landlord might need legal protection in a range of different situations.
Legal protection, also known as commercial legal protection, can cover the costs of taking legal action or defending yourself against legal action in relation to your landlord responsibilities.
If you have a troublesome tenant who won’t pay their rent but also won’t vacate the premises, you will likely need to take legal action. Evicting a difficult tenant can lead to lengthy and expensive legal proceedings, which is why legal insurance could save you money in the long run.
6. Cyber insurance
As a landlord, you will be the holder of the sensitive data of your tenants, such as names, addresses and payment details. This makes you a potential target for cyber-criminals looking to steal sensitive information.
Cyber insurance won’t prevent a cyber-attack, but a comprehensive cyber insurance cover will help rebuild your business following the event. A cyber insurance policy can help with dealing with ransom requests, damaged software, crisis containment and media liability in the aftermath of a cyber-attack, to ensure that you can effectively rebuild your business.
In most cases, regular business interruption cover is unlikely to cover the cost of a business interruption caused by a cyber-attack. This is why a cyber-insurance policy is so important when it comes to rebuilding your business.
7. Statutory Inspection of lifts
If your buildings have a lift installed, it will require statutory inspection regularly to comply with the Lifting Operations and Lifting Equipment Regulations 1998 (LOLER). Typically, a thorough inspection is required every 6 months.
Property insurance with Premierline
Every property owner in the UK, residential landlord or commercial landlord, will have insurance needs unique to them. This is why the insurance advisors at Premierline will assess your insurance requirements and find the right landlord insurance package for you.
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Business Guidance08 July 2019
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.