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Buy to Let Home Insurance

Buy to let home insurance is a type of property insurance used by landlords. While homeowner's insurance protects the property and contents, buy to let policies protect investment real estate and offers personal liability coverage.

Buy to let home insurance is more commonly known as landlord insurance. This type of policy is not the same as homeowner's insurance or renter's insurance and does not cover personal property owned by tenants.

Instead, buy to let home insurance addresses special risks landlords face when using real estate as rental property. Buy to let offers additional protection which covers damage to the property, legal counsel and fees, and up to twelve months of lost rental income.

When real estate investors act as landlords they must abide by state tenant laws. If tenants withhold rent or cause damage to the rental home, landlords must follow legal protocol in order to collect rent or sue for damages and lost income. By electing to include legal expenses as part of the buy to let policy, landlords will be compensated for tenant related legal expenses.

Buy to let home insurance can also cover property damage incurred by tenants. If property damage is so extensive that the home becomes inhabitable, landlord insurance can provide funds to renovate properties. During the rebuilding process, buy to let insurance compensates landlords for lost rental income.

As with most types of insurance policies, buy to let home insurance offers a variety of coverage. Some policies only cover damage caused to the interior or exterior of the home. Others cover damage and lost rental income. Some buy to let policies offer actual cash value to cover replacement costs, while others deduct depreciation from the actual cash value.

Landlords should take time to investigate the different types of buy to let home insurance policies to determine which is best suited for their needs. Since real estate is a major property investment, it is wise to purchase sufficient income to cover all potential problems that may arise.

One consideration that many landlords overlook is the fact they are responsible for their tenants safety. If a tenant incurs injury due to their landlord's negligence, tenants can sue to recover medical expenses. If landlords do not obtain landlord liability insurance coverage they are personally responsible for the tenant's medical expenses, lost wages and legal costs. Although adding liability coverage to buy to let policies will increase the premiums, these costs are minuscule in comparison to the costs of a tenant lawsuit financing.

At minimum, buy to let home insurance should cover repair costs of rental properties damaged by fire, flood and earthquakes. Coverage can be obtained for additional risks such as acts of terrorism and property deterioration.

Landlords should also purchase contents insurance to cover replacement costs of major appliances, water heaters, water softeners, and air conditioning units which incur damage due to natural disasters or by tenants.

Landlords that do not possess adequate buy to let home insurance, place their self at risk for financial ruin. Several insurance providers offer landlord insurance at affordable prices. Don't place your property and financial livelihood at risk. Invest in appropriate landlord insurance coverage and rest peacefully knowing you are covered in the event of property damage or tenant negligence.

Learn more about rental home real estate investing strategies in our personal investment article library. Here you will find information and resources to help you develop a successful residential rental business and create positive cash flow.