Renting & Insurance

Unless you're filthy rich, letting out a property without checking into rental home insurance offers smacks of a subconscious desire for self-sabotage. Even if you have known your tenant your entire life and trust him or her entirely, there is no way to guard against the costly damages that can accidentally occur to a property. Fires, bizarre weather phenomena and age-old pipes all have the ability to render a home unlivable and completely worthless.

More than likely, you haven't known your tenant your entire life and because you can't control anyone's actions but your own, it makes sense to protect your investment and yourself from heartache and financial ruin. It will also mean saving yourself some legal troubles as well. Imagine your rental property burning to the ground and having no insurance. Sooner or later, someone's going to want to know why you were letting a home without it.

If you have a mortgage on the property you are letting, it is likely you've got insurance in place already but that shouldn't stop you from checking out other rental home insurance offers. It is not uncommon for first-time landlords to think their current standard policy is enough only to file a claim and have it rejected— and then find themselves dropped like a hot stone. Even though it shouldn't happen, it may be pretty hard to find anyone to cover you after that.

Like standard insurance, you'll find insurance for landlords covers buildings and contents. Obviously, you'll want enough coverage not only for damage to the "brick and mortar structure" but its rebuild cost. When figuring this, most people make the mistake of going off the property's purchase price. However, since the ground your home is sitting on essentially cannot be lost or destroyed, insurance companies solely concern themselves with the structure sitting on top of it.

To get an accurate figure for buildings coverage, it will be essential to leave out the cost of the land your property is sitting on. If you try to figure in the cost of the lot, you could end up paying too much for your coverage— and it is not likely the insurance company will catch your mistake. Luckily, most policies come with unlimited coverage for buildings but it still pays to know all the facts. 

In addition, your tenants will be covered should an unfortunate event such as fire or some other type of severe damage leave them without shelter. This can strengthen the landlord-tenant relationship and help relieve the stress for both parties who are suddenly facing an unexpected loss.

If your intention is to rent out a furnished property, contents insurance written on a new-for-old basis will be vital. Anything in or on the property belonging to you will be replaced if it is lost, stolen or destroyed. It does not, however, cover anything that belongs to the tenant. 

There are other types of landlord insurance such as accident and emergency coverage that, although optional, make good fiscal sense. If you're the type of landlord that allows pets or has a clumsy tenant that tends to spill things on the carpet, constantly replacing even the smallest household items can start to add up over time. Most landlords who don't opt for accident and emergency insurance start to see their expenditures eat up any profit they had hoped to keep for themselves. This is especially true in older homes where pipes can burst and roofs leak.

Other types of optional insurance for landlords protect building owners should someone get injured on their property or when a dishonest tenant decides to play games rather than pay the rent on time. It not only covers the lost months of rent, it will pay for (a limited amount of) legal expenses if the matter ends up in court.

Letting out a property is a big step and the last thing you want to do is cheat yourself by going for the cheapest home rental insurance offer you can find. While you should definitely stay within your budget, nothing is worse than finding out the hard way your insurance is woefully inadequate for the disaster you are facing. With enough time, research and patience, you should be able to land an insurance policy that truly fits your needs and the needs of the property you will be renting.



Property Letting Guide

Successful Property Letting: How to Make Money in Buy-to-Let
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