Why you may require let property insurance

Sometimes, the requirement for let property insurance may catch people unawares.

It may, in fact, happen more easily than you may think.

A classic owner-occupier property

Let us assume that you own a property that you also occupy. In that sense, you are a conventional owner-occupier and home owner-occupier buildings and contents insurance may be perfectly adequate for you.

Yet that position may change quickly if you suddenly decide to start letting out part of your property - perhaps even only a room or two.

Once that happens, you have, by definition, started to obtain rental income from your property and you have automatically made the transition to being a landlord.

Although there may be many implications arising from this, the most important, in insurance terms, is that you may immediately have invalidated any existing owner-occupier buildings and contents house insurance that you have in place.

The logic

Insurance providers typically regard let property (whether the property is let in full or part) as having a different risk profile to owner-occupier properties.

To provide cover for such property, they offer specific policies that may be called let property insurance (sometimes also called landlord property insurance or buy to let house insurance etc).

The different risk profile arises from a number of factors, several of which are related to the fact that your property will now have tenants in it.

For example:

• tenants may not be quite as proactive as an owner in terms of reporting and dealing with minor faults, such as leaking radiators or slipped roof slates - all things that may lead to significantly more damage to your property if left unattended;

• tenants or their visitors, may be rather more inclined to sue a landlord under third party liability provisions, should they suffer an injury on the property that they believe is attributable to poor maintenance etc;

• tenants may not always take household security as seriously as an owner-occupier would.

For all these reasons, let property insurance is essential for landlords if they are to obtain adequate cover.

The reality

Typically, landlord property insurance may be marginally more expensive than owner-occupier cover for the same property (though it should be kept in mind that it is not a fair comparison as the policies are covering different risk profiles).

As a result, it may be tempting to try and economise by using owner-occupier rather than buy to let buildings and contents insurance.

That may prove to be an expensive mistake.

Owner-occupier insurance will never be valid for a property that is being let out. In the event of a claim, insurers may apply sophisticated techniques to ascertain the exact occupancy position of the property at the time the incident arose.

If it is found to be the case that it was being let out and you do not have let property insurance, then your claim may be rejected.