Where should you get property insurance?
See our Global Guide to Property Insurance.
Regular home insurance does not cover many of the things that can go wrong if you are letting out a property.
Furthermore, if you are relying solely on standard property insurance and letting out a property the insurance company may refuse to pay out in the event of a claim.
Landlord’s insurance is more expensive than standard home insurance, but it is worth the extra cost. As we always say: when it comes to insurance, cheapest is very seldom best.
Is landlord’s insurance mandatory?
In many countries, yes.
In some countries, no. However, it is not worth the risk of not having it.
See our individual country guides to see if it is mandatory in your specific country.
If you are going to let out your property on a regular or constant basis, you will need landlord’s insurance.
What does landlord’s insurance cover?
Don’t forget to read your policy thoroughly to make sure all necessary areas are covered. It’s not much fun but it is very important to do.
- Malicious damageYou should be covered in the event that a tenant deliberately damages your property or its contents (well, those that belong to you!).
- Non-payment of rentThis is especially important if you rely on the monthly income. Check that the limit on the policy is enough to cover your expenses.
- Rehousing/ loss of earningsIn the case of an insured event, your policy should cover you for temporarily rehousing your tenants. It should also cover you for non-payment of rent during this time.
- LiabilityYour insurance should protect you in the event that a tenant or outside party sues you after an accident.If possible, get a policy which includes employer’s liability (in case anyone doing, say, maintenance or management work has an accident). If you cannot, you should get separate employer’s liability insurance (see below).
Unoccupied property insurance
If you are not going to be letting (renting out) your investment property regularly (relying only on capital gains), or if there will be some time between lets, you will need unoccupied property insurance.
Unoccupied (or vacant) property insurance can also be used if your home is going to be empty for a long period of time before a sale, or during construction work or refurbishment.
As with landlord’s insurance, unoccupied property insurance is more expensive than regular home insurance. The property is at greater risk of squatters, burglars and increased damage after an accident (for example, a branch could crash through the roof – the interior of the property would be left exposed to the elements until you found out and action could be taken).
Unlike landlord’s insurance, it can be quite difficult to get a long-term policy; or, at least, to get it at a reasonable cost. Properties left empty for a long time are very high risk.
Is unoccupied property insurance insurance mandatory?
In many countries, no. However, it is not worth the risk of not having it.
Increase your chances of getting unoccupied property insurance
You stand a much better chance of being able to get decently priced long-term vacant property insurance if you make sure your house is in the right condition:
- Is your property suitably protected against area-specific dangers? If your property is in, say, an area with regular hurricanes or typhoons, does it have hurricane shutters? If it’s in a country with a high risk for earthquakes, is it earthquake resistant?
- Have you prepared the plumbing? Most insurers will want you to drain the water system and set the heating to a ‘frost’ setting so pipes don’t burst.
- Is the surrounding area safe? Take the time to hire a tree surgeon or landscaper if you think that any surrounding trees are at risk of damaging the house during bad weather.
- Can you inspect the property regularly?If not (due to distance), can somebody trusted do it for you?
- Have you arranged regular maintenance of the property?
- If you have a pool, is it covered and inaccessible?
- Have you installed a good security system? Do you have a monitored burglar alarm, good locks and remote cameras?
- Have you ‘burglar-proofed’ the house in other ways? You can set timers on lights and speakers to make a house seem occupied. If you are on good terms with a neighbour, you can ask them to park a car in your driveway.
- Do you have monitored fire alarms?
Ask your insurance company for more ways to lower your premiums.
Making a claim on investment property insurance
See our Global Guide to Property Insurance.