Any landlord who decides to rent out a property to tenants should ensure that the building is adequately insured. Tenants will usually take out their own contents' only insurance but that will only cover their own belongings and will not include replacing or repairing the fabric of the building. Most insurance companies offer landlords’ building insurance and it’s a good idea to shop around for the best quote.
The cost and risks covered by UK building insurance vary according to the type of tenant renting the property. Most insurance companies will ask for details of the prospective tenants and will vary the premium based on this information. If the property is lent to students, the premium cost may be higher than for a single, professional tenant. Insurance for holiday may also require a higher premium, depending on the location of the property and whether, for example, it is unoccupied during the winter season. The cost of property insurance for buildings lent to commercial tenants will also vary according to the nature of business being carried out by the tenant.
The risks covered by buildings insurance for landlords vary according to insurer and will also depend on the location and nature of the property. Most landlords insurance policies will insure against fire, flood or damage. Other risks to consider, depending upon the property, are vehicle impact, subsidence and earthquakes. Some lenders also provide insurance for loss of rent while the tenant is unable to live in the property. The amount of rent insurance will be quantified by the insurance company and may be capped after a certain period, for example six months or a year. If a landlord has taken out a mortgage on the property, it’s important to correspond with the lender regarding the risks to be covered by the building insurance.
Landlord's building insurance should include cover not only for the current value of the tenanted property, but also for the full cost of rebuilding, if that should be necessary. The rebuilding cost should take into account the cost of any outbuildings, for example sheds or garages. A surveyor can advise on the rebuild value of the property, and online calculators can also provide a broad estimate.