As insurance brokers, we hear a lot of misconceptions about insurance for properties you're renting out.
To try and muddle through the confusion, we’ve compiled some of the most common ones we hear from our clients.
Myth 1: “I only rent out a couple of rooms to help pay the mortgage and I’m still living at the property so I don’t need specific buy-to-let insurance”.
Wrong – Most standard household policies will not cover letting and you should contact them urgently to discuss.
It may be that they can extend your policy to cover letting, else you should seek a specialist Landlords Insurance policy.
Myth 2: “I’m working abroad for a year and my niece and her boyfriend are renting my flat until I get back. As its family, I’m not worrying about all the paperwork…..”
Wrong – Whether you have a written agreement is irrelevant as a verbal contract will exist, the property will be classed as being let and you will need the appropriate buy-to-let property cover extensions.
It’s not just the standard fire, theft or flood risks which exist, but also the additional legal liability exposure as a property owner.
Should your niece or her boyfriend injure themselves at the property, for instance a gas leak causes illness, you could be held liable and need to call on the property owners liability section of your Landlord Insurance cover.
Myth 3: “It's specialist Property Insurance, of course they’ll realise that the property might become vacant or unoccupied from time-to-time”
Wrong – Whilst changes of the tenant may be normal, most policies still require you to contact your insurer if your property becomes vacant or you have a change in tenancy.
A buy-to-let insurer may offer an extended unoccupancy period to take into account the search and changeover of tenants.
However the policy will still include a limit, typically 60-to 90 days, beyond which your insurers need to be notified and specific policy terms may be applied.
The let property policy is also likely to include some unoccupancy conditions (e.g. turning off services) and it’s important that you take the time to understand both the time period and any conditions which may apply.
If the property is unoccupied for an extended period, specialist unoccupied property insurance is also available.
Myth 4: “I already have a rent guarantee contract with my letting agent so I won’t need loss of rent or rent guarantee insurance”
Wrong – Typical rent guarantee schemes operated by letting agents surround security of rent payments by tenants and have no connection with the loss of rent cover offered under a Landlord Insurance policy following an insured loss so it’s important that they do not get confused or you could find yourself unexpectedly out-of-pocket after an insurance claim.
Myth 5: “Buy to Let Insurance will automatically cover me if the tenant damages the property”
Wrong – Imagine the nightmare scenario, your tenants have disappeared and you return to your let property to find the kitchen has been smashed up incurring damages far in excess of the rent deposit.
Not all Let Property Insurance policies extend to cover malicious damage by tenants and cover could also vary depending on the tenants' occupations.
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