Being a landlord comes with a unique set of challenges. You are responsible for the safety and wellbeing of your tenants, which means ensuring that the property is compliant and free of any hazards. You also need to be available to respond to maintenance requests and deal with any other issues that may arise.
Additionally, you need to screen prospective new tenants carefully and ensure both sides adhere to the tenancy agreement. Once all this is in place, there is still the chance that something could happen which means you can’t collect rent from your tenants for a period of time. Would you be able to meet your own financial obligations if this was the case?
There are many different types of events that could cause you to lose rental income, including a flood or fire amongst others. As well as the usual landlord’s insurance cover, if you are renting out a property you own, taking out loss of rent insurance will protect you against losing this source of income.
Loss of rent insurance will protect you in the event that you are unable to collect rent from your tenants as a result of an insured event, which can help alleviate some of the stress associated with the situation. In this blog post, we’ll discuss the benefits of loss of rent insurance and why you should consider adding it to your property owner’s insurance portfolio.
What Does Loss of Rent Insurance Cover?
As a property owner, there are many risks that you face on a daily basis. One of the biggest risks is the loss of rent income if something happens to your property that prevents your tenants from being able to live there.
There are many different types of events that could cause you to lose rent, including fire, flooding, theft, and even the death of a tenant. If you are unable to collect rent as a result of one of these events, it can have a serious financial impact on you and your family. Loss of rent insurance covers you against events like these affecting your rental income.
What is not covered?
Losses due to a tenant defaulting on their rental payments are not typically covered in loss of rent insurance, however you can usually add tenant default insurance (or landlord rent guarantee insurance) to help cover the risk of unpaid rent when building your policy.
Cover for the building itself and cover that protects an unoccupied property are also not included under loss of rent insurance. As a landlord you will need to additionally take out buildings insurance, and if your property is unoccupied for a period of time then you should consider taking out unoccupied property insurance at this time.
Benefits of Loss of Rent Insurance
Loss of Rent insurance can help protect you from the financial burden of lost rental income. The policy will typically reimburse you for a portion of the rent that you would have collected if the insured event had not occurred.
While your first instinct may be to think that loss of rent insurance is unnecessary, the truth is that it can provide a much-needed financial safety net if an unforeseen event makes your rental property uninhabitable for a period of time.
Some of the benefits of taking out loss of rent insurance include:
Loss of rent insurance protects your income
As a landlord and property owner, the rent you collect is likely one of your biggest sources of income. Managing without that income could be very difficult, particularly if it is for an extended period of time. Loss of rent insurance protects you against loss of income in the event that you are unable to collect rent from your tenants due to circumstances or an insured event beyond your control.
Loss of rent insurance gives you peace of mind
The money you get from renting out your property may be significant and be an important source of income for you, which could cause all sorts of problems for you if it stopped coming in. Loss of rent insurance can be especially beneficial if you rely on the rental income to make mortgage payments or pay other bills, giving you peace of mind knowing that you can still meet your own financial obligations. It can also help you cover the cost of alternative accommodation for your tenants if they are displaced as a result of the insured event.
Loss of rent insurance is affordable
Loss of rent insurance is an affordable coverage for property owners. When compared to the potential losses that could be incurred if your tenants are unable to pay their rent, loss of rent insurance is a small price to pay for the peace of mind and financial protection it provides.
In conclusion, loss of rent insurance is an important coverage for those who own and rent out property. It protects against financial losses if your tenants are unable to pay their rent due to job loss or illness, and it gives you peace of mind knowing that you’re protected financially in the event that your tenants are unable to pay their rent.
In addition, loss of rent insurance is an affordable coverage for property owners when compared to the potential financial losses that could be incurred without it.
Taking Out Loss of Rent Insurance
Taking out loss of rent insurance is an often overlooked but important step for anyone who owns a rental property. In the event that your property becomes uninhabitable due to a covered loss, your policy could provide coverage for up to twelve months of lost rental income. This can help tide you over until repairs are made and your tenants are able to move back in.
Loss of rent insurance is usually taken out as an addition to your residential, commercial or multiple property landlord insurance policies. You can either add it when you take out your landlord insurance policy or add it later on to an existing policy. Be sure to consider the policy limits and excess when choosing a policy so that you understand exactly what your cover entails.
Policy limits
An important factor to consider when choosing a loss of rent policy is the policy limits. Many policies will cover up to twelve months of lost rental income, but some may only cover six months. Be sure to discuss your needs with your broker and/or read the fine print so that you understand exactly what your policy covers.
Excess
Like any other type of insurance, loss of rent insurance comes with an excess. This is the amount that you will have to pay out of pocket before your cover kicks in. Excess amounts can be in a wide range so make sure you choose a policy with an excess that you can afford in the event that you need to make a claim.
Getting the right advice
It is important to get the right advice when taking out loss of rent insurance. Your broker should advise you on the type of property owner’s policies that are the most appropriate for you and whether loss of rent insurance would be beneficial.
By discussing and understanding the full details of your property portfolio, your insurance broker can find the best cover to protect you. They can also discuss any policy limits and the excess you would like to pay.
They should be able to provide a full range of landlord insurance, including building cover, landlord’s liability, loss of rent cover, etc without being pushy and trying to sell you cover you don’t need.
Choosing an insurance broker that knows the industry is important, so that you can get expert tailored advice from someone who knows their stuff. They should be able to educate you on what cover you really need and then place you with the right insurer to protect your risk at the best possible price.
Why choose Construction Insure?
At Construction Insure we have forty years of experience within the construction industry, working with contractors, property developers and landlords to find the right cover for them.
We understand the property industry inside out and have many very happy customers who return to us time and again when they need advice and cover for their projects and property portfolios.
We’re not the type of broker who just takes your money and leaves it at that. It’s important to us to get to know our customers and to ensure we get you the cover we know you actually need. Our customers know we care about doing the very best for them and will continue to build a relationship with them after they sign up.
We will talk with you to find out what your needs are and listen to your concerns, as well as understand your budget. We then use our knowledge, expertise and contacts in the industry to put together an insurance package that is just right for you.
Even if the different types of landlord insurance available seem confusing, you’re in safe hands with us. We will explain exactly what level of insurance you need and why, as well as exactly what it will cost you, with no hidden surprises.
If you are a landlord and property owner, don’t wait until it’s too late to get the right insurance. Whether you have one property you rent out or are growing a portfolio of rental properties, at Construction Insure we can provide cover that will give you the peace of mind you need.
This includes landlord insurance for loss of rent, building insurance, malicious damage, theft and accidental damage. We can also offer additional benefits, which come without an extra charge, including rental guarantee, boiler breakdown and legal cover.
Why not call us today on 020 3958 6868 for friendly, impartial advice?