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Friday, February 08, 2013

Will conventional home insurance suffice for a rental home?

Conventional home insurance will not cover your home if you rent it out. What you will need is landlord insurance; with companies such as this is easily acquired. Essentially landlord Insurance will protect your property as an investment rather than as the home in which you live, and so although it is similar in some ways to ordinary home insurance, in other important ways it is very different. Here we will look at some of the important elements of landlords insurance, and how they differ from home insurance.
The first of these is Buildings Insurance which covers you against losses resulting from damage to the building. As well as covering you for repair to the property, it can also cover you for loss of rental income that results from this damage.
Public liability is also part of the landlord insurance. This covers you should any third party decide to sue you for damage or injury they have sustained as a result of a defect or other problem with the building; for instance should they trip over a damaged flagstone.
Contents insurance can be added to the policy, and if you are letting the property furnished then you will almost certainly need it - and you should include accidental cover which will cover you against damage caused by your tenants. It is important to note that this does not cover contents owned by your tenants.
If you employ anybody in the course of your letting business you will need employer’s liability; in fact this is a legal requirement. It will cover you for any claims made against you by employees who sustain injuries whilst in your employ. You should note that this is not covered by public liability.
There are a number of extras that you are able to add to your policy. One of these is rent guarantee, which will compensate you for loss of rental income as well as providing legal cover should you need to evict your tenants.  This is particularly important if you are dependent on the rental income.

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