Carolyn Uphill a landlord and Chairman of the NLA on making sure you have the right insurance cover and the perils of not doing your research.
During my time as a landlord and as Chairman of the NLA I have come across many landlords who thought they had appropriate insurance cover but unfortunately found out the hard way that they in fact needed specialist landlord insurance. Landlords should treat their investment as a business, and as with all business operations there are rules and regulations, with stiff penalties for getting things wrong. Essential are things like making sure they have the right paperwork, establishing good relationships with their tenants and providing the necessary services for a comfortable tenancy. But what about all the other risks you face as a landlord?
One thing is for sure; standard building insurance will not do
Whatever size the portfolio, a landlord needs to make sure they are protected. I have lost count of the number of conversations in which a landlord has said they thought that their standard house building insurance policy ‘would do’. Sadly that is far from the case. Without notifying your insurer that you have let the property out, your insurance may not be valid at all and it will not cover you for the things which as a landlord you may be liable for.
Do you have the appropriate cover?
Loss of Rent
Did you know only 23 per cent of landlords have loss of rent cover? That’s nearly three in four landlords who underestimate the significance of specialised landlord insurance. If, for example, your property burns down, not only do you need to rebuild it, but you may also need to re-house your tenant, at your cost. Of course, this is not an everyday occurrence but it will prove to be a very difficult and costly situation if you don’t have the right cover in place. There will still be outgoings, such as the mortgage, which needs to be paid whilst the property is being rebuilt and without a specialised loss of rent cover, there will be no income to help mitigate these payments.
Public liability cover is another area of protection which landlords mustn’t overlook. Only a specialist landlord insurance policy will provide you with this cover and that’s why you need to ensure you have the right policy for the business you’re in.
All businesses come across potential bad debts during their lifetime and these costs must be accounted for, otherwise it could destroy a business. It is no different for landlords; these debts are more commonly known as ‘rent arrears’ and are critical for those of you who may have a mortgage to pay, which is why investing in a ‘Rent Protect’ policy is a must.
You never know what might go wrong and all these eventualities can be insured against. With our business heads on we need to calculate the risk to us, the damage they would do to our finances and consider investing in an appropriate policy.
Where to look
The NLA exists to support the private sector landlord and one of the ways we do this is to offer specialist products and services that can be trusted to suit the needs of the landlord and you will find details of these on our web site at www.landlords.org.uk/services
There are lots of other risks to consider, financial and political, and we can’t protect ourselves from all of them but we must wise up to those which are foreseeable and controllable if we want to reap the rewards of our investment.