understanding financial jargon
Landlords insurance (or buy to let insurance) provides cover for a let property, the contents (those supplied by the landlord only) and landlords liability insurance. A normal home insurance policy is not valid when you are taking an income from the property. A single policy can cover either a single property or a property portfolio, and will ensure your investment is protected, whether you are an individual renting out a second home or a property tycoon with an expanding property portfolio. Landlords insurance would pay you in the following events:
- Your property is damaged by a fire and your tenants have to move out. Your landlord's insurance would not only pay for the work to repair the property, but also pay you the 'lost' rent due to not having tenants living in the property during the rebuild period.
- You fall out with your tenants. They stop paying the rent, refuse to leave and, you are forced to take them to court to them evicted and collect rent owed. If your Landlord's insurance includes legal expenses insurance cover then all of your costs accrued in fighting the court case would be compensated.
You will be asked to give an estimate for the Buildings Sum Insured (BSI) when enquiring about landlord's insurance. BSI is an estimate of the cost for rebuilding your property should it be completely destroyed. This is not the market value of the property, which is normally much higher, or the local authority valuation for tax purposes. It is the cost of building the property from scratch, which is currently between approximately £60 - £120 per square foot in the UK. If you give the market price of the property as the BSI, you will be paying more than necessary. However also be careful not to understate the BSI otherwise any claim made would be reduced in proportion to the amount you have underestimated. A chartered surveyor will be able to help you work out rebuilding costs for insurance purpses.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
We hope you found this information useful.
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