WHAT IS BUY-TO-LET INSURANCE?

Pinder Dhaliwal, managing director of ON THE HOUSE Magazine sponsor Falcon Insurance quizzes his team about what new investors need to know when it comes to insuring their investment property

If you are new to buy-to-let investing there can be a lot to get to grips with. In order to help you find the information you need - when it comes to insurance anyway - our team has put their heads together to answer your frequently asked questions and dispel a few myths about buy-to-let insurance.

WHAT IS BUY-TO-LET INSURANCE?

Buy-to-let Insurance is commonly known as landlord Insurance or BTL Insurance. It’s a policy designed to protect landlords and their investment properties.

WHO IS BTL INSURANCE FOR?

BTL insurance is designed for residential or commercial landlords, either with a single investment property or a multi-property portfolio.

DO I NEED BUY-TO-LET INSURANCE?

Although it’s not a legal requirement, you’re likely to need BTL Insurance if you have a mortgage on your rental property. Banks need to know their investment is protected if your property is damaged or destroyed. As such, they will insist that you have landlord (or buy-to-let) buildings insurance as a minimum. Even if you don’t have a mortgage, landlord Insurance provides vital peace of mind. You know your investment – and your finances – are protected if the worst happens.

CAN I BUY HOME INSURANCE INSTEAD?

Unfortunately, not. If you rent out a residential property, home insurance doesn’t provide suitable protection for the risks you face. BTL insurance provides cover for additional risks. For instance, it includes Property Owners Liability cover (see below), which isn’t included with Home Insurance..

WHAT’S THE DIFFERENCE BETWEEN BTL INSURANCE AND LANDLORD INSURANCE?

There isn’t one! The two policies are essentially the same.

HOW MUCH DOES BUY-TO-LET INSURANCE COST?

Landlord BTL insurance, like many other insurance products, is dependent on a number of different factors, including your own claims history, the condition of the property and whether you buy any additional protection and tenant type.

CAN I GET INSURANCE FOR AN EMPTY BTL PROPERTY?

Most residential landlord insurance will cover an empty property for up to 90 days between tenants. If the property is empty for longer than this, you will need to arrange specialist cover, because the risks faced by an unoccupied property differ from those of a tenanted property. Remember to let your broker know if your property is going to be unoccupied for a prolonged period. They can advise on the appropriate course of action.

WHAT DOES BUY-TO-LET INSURANCE COVER?

It covers a range of areas, protecting you and your property. Covers include:

Property Owners’ Liability - Protects you if your tenants, their guests or a member of the public is injured, develops an illness or suffers property damage and they sue you. Employers’ Liability Insurance - If you have employees or contractors working at your property, this protects you if they are injured or get ill as a result of visiting your property.

Landlord Buildings Insurance - This protects the fabric of your property (walls, floors, ceilings etc.) in the event of damage or destruction, up to the rebuild value. Landlord Contents Insurance - This covers your items within the property (such as light fittings or white goods). Tenants can protect their own items with a separate tenant’s contents insurance.

Loss of Rent Insurance: This covers the value of your rental income if your property becomes uninhabitable following an insured event, such as a flood or fire.

Landlord Legal Expenses - This covers any legal costs you may suffer as a result of running your rental business, for instance, evicting your tenant due to unpaid rent. Rent Guarantee Insurance - This is an extension that can be added to Landlord Legal Expenses. This policy covers your rental income if you have to start legal proceedings due to a tenant not paying the rent and you apply for permission to evict.

DOES BTL INSURANCE COVER NON-MALICIOUS DAMAGE?

Yes, accidental damage to your buildings and contents is typically covered. Some policies will also include malicious damage and theft by the tenant cover.

HOW DO I GET A QUOTE?

You can go directly to an insurer or use a price comparison website, but we’d advocate using an independent insurance broker (obviously!) An insurance broker will speak to you about your unique circumstances before finding the best landlord insurance for your individual needs. Because you’re working with a real person, they can answer any questions you may have about your policy and provide advice about managing your risks.

To get a competitive landlord insurance quote please call our office on 0121 679 7265