Starting out as a landlord can be as straightforward as deciding to rent out a property. But you would also need to capture the factors related to the time taken to achieve the goal: finding the tenants, checking all safety requirements, preparing the deeds for the tenancy, making arrangements for maintenance and ensuring the property was ready. Insurance: should be close to the top of the list.

The most common mistake made by novice landlords is assuming that the insurance they have on their own home will provide cover when they start letting the property to tenants. Of course, not always the case. While an ordinary home insurance policy is generally intended for a home occupied by the owners, letting can involve quite different insurance needs, and a landlord should speak to their broker or insurer before letting commences to ensure appropriate cover.

The reason that distinction is important is that a rental property is no longer just somebody's residence. It's an income-producing investment that has tenants living there who are not the owner and they are subject to the restrictions of being a landlord.

Renting Changes The Risk


The risks involved in renting a property to keep a rented home secure differ from those of an owner-occupied home.

Likely to be accidental and malicious damage by tenants for example, and effects like escape of water, fire, storm damage, or break-in. There may also be the need to cover furniture or appliances provided by the landlord in the property.

Next, finance. If the insured event of a serious nature and results in a property being temporarily uninhabitable, a repair process may take weeks or months. In the meantime, the landlord will have bills to pay - mortgage, maintenance etc. even if they are not receiving income from the property.

That is one of the reasons why landlord insurance may differ from ordinary home cover. MoneyHelper mentions that features for landlord insurance may be able to include; buildings and contents covered with the additional cover of rent loss and damage or injury in connection with a tenant.

What Proper Landlord Cover Can Include


Exact coverage differs between insurers and policies, so the language and exclusions should be carefully examined. To sum up, though, landlord insurance can aggregate a number of major risk areas:

Buildings cover involves the physical asset and permanent fittings; the building itself. This can be particularly significant where the building constitutes a significant part of the landlord's investment.

Contents cover may be applicable where the landlord brings furniture, appliances, carpets, or other items. A furnished letting property clearly has a different insurance need to an unfurnished.

Another area is liability cover. Landlords have a duty to keep homes in good repair and to take action about certain hazards. For instance, in England, a landlord is responsible for keeping rented dwellings safe and free from health hazards, and, in certain circumstances, for maintaining elements such as the structure, heating systems, water, and electrical installations.

These duties also mean that the notion of liability can hardly be an afterthought. If a tenant or visitor sustained an injury arising from a problem related to the building that the landlord's legal duty extended to fix, the economic impacts could be far greater than those needed to make the building good.

Sort Insurance Before the Tenant Moves In


The ideal time to consider landlord insurance is before the property is marketed, not after the tenancy has begun.

Including insurance as part of pre-arrival proceedings allows the new landlord to determine precisely the scope of cover, exclusions, and whether extra protection is required. It also allows the policy to be viewed with other practical steps, such as safety checks, inventories, or other documentation.

If you have the right Landlord Insurance before your tenants move in, it can not only cover your building and contents but can also cover the liabilities involved. For someone new to landlord Insurance, just having that initial base in place from day 1 can definitely cut out one needlessly stressful element.

In addition, it may be useful to remember that insurance does not cover landlords' legal obligations. A policy cannot be used as a substitute for a landlord taking responsibility for ensuring a property is safe. It cannot do away with a landlord's legal obligation to carry out any necessary repairs or inspections. In England, for example, under the Housing Act 2004 there is a landlord's obligation regarding: gas and electrical safety; alarms; and the condition of the property:

A Small Task With A Wider Purpose


For first-time landlords, the temptation is to attend to the running of the property first: new curtains and pictures, photographs taken of the rooms, the searches made and the keys prepared.

Insurance is not as evident, but possibly more basic. The right policy will not remove the actual workload of managing your own property, but it may act as a form of financial cushioning in respect of your property and the associated liabilities:

For that reason, proper insurance is nothing like just another administrative chore to add to the list. Among all the responsibilities on a new landlord's checklist, the few pounds wisely invested in the property are crucial in supporting the choices a landlord is likely to make thereafter.