Buy to Let Home Insurance
If you own investment property, you face risks and possible damages that differ drastically from those assumed by simple homeowners. We will outline some of those risks below and see how Buy To Let home insurance can protect you against many of them.
Although rental income property can be a smart investment, you need to be
aware of the potential liabilities and losses inherent in this business. You must protect not only the physical property itself but you must also understand and indemnify yourself against the rightful claims that your tenants might make on you.
Basic coverage protects you against fire, wind, hail, flood and other natural damages. In addition, you may purchase riders that cover damages or destruction wrought by your tenants. If you’re a relatively new landlord, you may not realize the psychology of some renters.
Although the majority is respectful and takes good care of your property, a certain element rents and wrecks. You just may want to buy some coverage against this minority since they can rack up thousands of dollars of damage in short order.
Let’s take a look at the major components of this coverage.
Liability. This protects you against injuries suffered by tenants and others visiting your building. So, for instance, if an air conditioning unit fell and struck someone, your insurance would afford protection against medical and other claims the injured might seek.
Structure. This provides protection for your building against wind, fire, flood, and other natural disasters. In this sense, it�s no different than the insurance you would carry on your primary home residence.
Contents. When we think about contents insurance, we typically think about residents’ contents. However, as a landlord, you might store some high-ticket tools or equipment used in maintaining your properties. As an example, you might store a lawnmower valued at over $1,000, certainly worth insuring. And, in some cases, you may rent your properties fully furnished. In that case, those furnished items would be covered as well.
Typically, your tenants will be responsible for insuring their own contents against things like fire, flood, and other natural disasters that might jeopardize their personal effects. Even still, it’s wise to spell this out in your rental contract. In that way, if a disaster occurs, you can point out to the contract they signed; this should protect you against any of their claims.
Tenant accommodation insurance. If your building suffers damage making it temporarily or permanently uninhabitable, your tenants might rightly expect compensation from you for some reasonable amount of time when they can’t inhabit the building. Talk to your broker or agent about the laws in your state to understand the limits of your obligation. If you end up paying hotel bills for a month or more for three or four tenants, you can face a rather large bill.
Rent loss insurance. This feature covers you in case your property is made uninhabitable for a variety of reasons. Although policies vary, typical sorts of qualifying incidents include uninhabitable caused by fire, or construction damage caused by things like burst water pipes and faulty heating/air conditioning systems making your building unlivable.
It’s good business to reduce risk whenever you can, especially in a business like rental properties where you face myriad risks. Buy to let home insurance can put your mind at ease with many of these risks.