Following a raft of government decisions which have effectively squeezed the profits available to buy to let landlords, it has become more important than ever to cut the overhead, operating costs of running your business.
Since landlord insurance is likely to be an indispensable item of that overhead expenditure – and certainly a legal requirement if you have a mortgage – it is worth considering ways in which you might save money on its purchase:
- once you start shopping around for landlord insurance, it soon becomes clear that you are going to be spoilt for choice – there are literally hundreds of potential providers and it is unlikely that you are going to be able to compare each one’s offering in any meaningful or thorough way;
- a specialist broker, on the other hand, is likely to understand your specific needs and requirements before using his expertise and experience in matching these to the appropriate products on the market – at a competitive price.
Who are your tenants
- your target market as far as tenants are concerned is very much a business decision to be taken in the light of the type of property you own and the demand for tenancies in your particular area;
- if you are looking to save money on your landlord insurance, however, bear in mind that some insurers charge more – or may even decline your application for cover – if you declare that at least some of your tenants might be students, those in receipt of benefits or asylum seekers;
Choose your insurance carefully
- although you may be using the services of a specialist broker, it is still important to choose the cover you require carefully;
- the inclusion or addition of particular elements of cover may add a considerable amount to the premiums you have to pay – so if you don’t need them, choose an insurer who doesn’t include such features as standard;
- examples might be subsidence insurance or flood insurance – if you are confident that your let property is not vulnerable to such risks, you may be able to save a considerable amount on your premiums by discounting them, suggests a guide published by the Consumers’ Association’s Which? magazine;
- it is important that the total building sum insured under your landlord insurance covers the full cost of reconstruction following any catastrophic incident which totally destroys your property, but beware of over-insuring – you pay more than you need in insurance premiums;
- contents, on the other hand, are commonly underinsured by landlords, who find that, in the event of a claim, any settlement is insufficient for replacing damaged items – especially important if you are letting furnished accommodation;
Landlords liability insurance
- this is also cover which needs to be a priority – to indemnify you against claims from tenants, visitors to your let property or members of the public who may be injured or have their own property damaged and hold you liable;
- landlord insurance typically provides a minimum of £1 million of cover, but might be as much as £5 million – clearly, the higher the cover, the more expensive your premiums, so give some thought to the amount you might actually need;
Compensation for loss of rental income
- some policies may appear more generous than others in terms of the compensation offered if you can no longer collect the rent because the accommodation is uninhabitable following a major insured event;
- but you are paying for that apparent generosity in the price of the premiums you pay – so, if you do not need such high cover, aim for a policy that offers less.
Landlord insurance is a more or less essential overhead expenditure for any buy to let business – so, make sure you save whatever money is possible on the insurance premiums.