ASK THE AGENT - Do I need to insure my unfurnished rentals?
Q) I have a couple of properties that I rent out, unfurnished. Do I really need to insure them?
Some landlords seem to believe that insuring properties that they don’t actually live in themselves is simply a waste of money - particularly if they are let unfurnished. Not so!
Of course, if you have a mortgage on a rental property, you will automatically be required to have buildings insurance, at the very least - otherwise, you will be in breach of your mortgage agreement. Some lenders are making a point of checking this out, and if you can’t prove that you are covered, your mortgage could be terminated.
If you don’t have a mortgage, then strictly speaking, buildings insurance is optional. But remember, without it, the cost of making good any damage caused by such things as burst pipes or fire - whether caused by the tenant or not - could run into thousands. In addition, you might also have to meet the cost of temporary accommodation for your tenants while repairs are carried out.
But what about contents insurance – particularly where properties are let unfurnished? Even here, it still costs to replace such things as carpets, curtains and white goods. Some buildings insurance policies may include a small element of contents insurance to cover such items, but landlords relying on this need to check their policy carefully. (Of course, landlords’ contents insurance will not cover a tenant’s possessions – so tenants should be advised to arrange their own cover.)
So, at the vey least, I would strongly recommend that you obtain landlord’s buildings insurance – although, if the property is leasehold, then this would normally be obtained by the freeholder. You should of course carefully evaluate any policy you consider purchasing to see that it meets your requirements, and you will need to ensure that you comply with any conditions, to avoid any risk of losing your cover. Such conditions may include restrictions in respect of short or holiday lets, renting to employed tenants only, and restrictions on asylum seekers or company lets.