Insurance

Buildings insurance covers the risk of damage to the structure and permanent fixtures and fittings of a building, for example, due to a fire. If the property is leasehold, the freeholder will typically arrange the building's insurance and re-charge the cost to lessees.

Tenants are usually responsible for providing their own contents insurance to cover their personal belongings, which is a matter for the tenants. It is not possible to require them to do this.

The landlord should take out contents insurance to cover loss or damage to household goods they have supplied, e.g. white and grey goods, carpets, curtains and, in the case of furnished lets, other furniture and fittings.

Insurance for rented property is usually more expensive than for owner-occupied accommodation, and insurance aimed at owner-occupiers will not necessarily be suitable for rented property. The Association of British Insurers produces guidance for owners, explaining how insurers assess risks and what can be done to secure cover. Suppose the insurance company is not informed that a property is occupied by tenants (instead of being owner-occupied). In that case, it's likely to invalidate the insurance, and any claim made will either be refused or the insurance company will reduce any payout. Remember, insurance cover, like the mortgage, may come with conditions attached governing the type of tenant the property is let to.

There are particular policies for landlords that cover additional risks such as the loss of rental income and the cost of temporary accommodation where a property has been made uninhabitable due to one of the insured risks. Insurance can also provide additional cover for the landlord if the tenant is injured due to an accident on the property, together with other elements not necessarily covered by regular householder insurance.

The insurance market is highly competitive, and it is worth shopping around to find the best value for money. Landlord organisations often offer lower-cost insurance to members.

The tenancy agreement should take account of any implications of the type of insurance cover: for example, if the insurance places an upper limit on the cost of temporary accommodation, it may be worth, within the tenancy, limiting liability to the insured amount.