Renting property, do you need buildings insurance?

[Nuisance_Value]

My mother has a small 2 bed semi-detached cottage she is about to rent with no mortgage. As the tenant will have to take out contents insurance my mother was wondering if buildings insurance was really necessary?

The property was flooded a few years ago (nothing serious, literally a couple of inches of water) but this may happen again due to location. The total cost of putting this right was £1600, which is nothing compared to rectifying a major property flood, and I could easily rectify this scenario myself if it happened again.

Subsequently when she rang her insurance broker she got the impression they were going to hike the premium as she would now be a landlord. Her thinking is that the saving of premiums would far outweigh any costs required to put flooding right.

I did point out about fire damage, but surely the tenant could be held liable for this, assuming of course all the gas and electric certificates were up to date and not a cause? And they don't die (though the estate could be liable?).

So is there any legal obligation to have buildings insurance? If not, can the wisdom of PH point out why this wouldn't be a good idea?

Thanks.

[Vixpy1]

I think its a good idea, I have landlords insurance and it costs me about £250 a year

[BuzzLightyear]

You should get buildings insurance because it covers you for all sorts of things which may not be the responsibility of the tenant so you could lose the property and not have any recourse.

You may also find that it's a requirement of the tenancy agreement that you must keep the building insured.

HTH

[Paul Drawmer]

As the owner of the property your Mother should protect herself against liability claims in the event of a visitor falling and claiming negligence in respect of the upkeep of the building or its paths etc. Also; should a slate or tile fall off the roof etc.

In respect of fire, it would be the owner's responsibility to have safe electrics, and any electrical fault may result in a fire or liability claim.

Just as the tenant will sign a contract to pay the rent, the other side is that the property owner is providing a home to live in. If that building isn't protected, then not only might the building be lost, but the owner would be liable to provide the tenant with suitable accommodation.

In short; unless your Mother likes a gamble, she does need to insure against damage to the property and liability to the public. Landlords or property owners cover is needed.

If the property has been flooded, then yes the premiums will go up. How many times the premium did the insurance company have to pay out?

Your Mother should also ensure that the tenants have insurance to cover their liabilities.

[Nuisance_Value]

Quick and very valid replies. Thanks guys.

Third party liability is an unknown quantity and as such should be covered. I also hadn't considered it being a condition of the tenancy agreement.

With regards to current cost vs flood payout I believe it's in the order of x4. £400 a year sounds expensive to me. She's been with the same broker at least 20 years, so I'll see what they say but I think some shopping around will be the order of the day.

Any suggestions for competitive landlord insurance companies?

Thanks again.

[Superstu]

If she takes a buildings policy out she can also cover loss of rental income following a claim for an insured peril ( fire/flood etc) for a couple of hundred quid well worth it

[Paul Drawmer]

What you will find is that you will have difficulty in getting a new insurer to take on the risk. Do NOT cancel the existing cover until you get a new insurer.

see ABI statement on flood insurance availability.
http://www.abi.org.uk/Publications/24982.pdf

Basically it says that the existing insurer will insure the property until 2013. Depending on the severity of the risk, it may be difficult to get anyone else to cover it.

If you PM me the full address, I'll look up the risk rating for river, surface water, and sea floods on the property for you.

[Wings]

Not only building insurance but also your mum should consider a small sum for contents, white goods, carpets, curtains, kitchen units etc., although the latter might be included.in the building insurance. When insuring ensure that the insurance covers for renting the property out, check policy details, type of tenants they don’t insure, those on housing benefit, also cover when property is empty.

[rufusgti]

Your mother wouldn't think £400 a year is much if a tennant falls asleep with a candle lit and the whole house burns down.
Why do you think the tennant would be liable?
And if they were. How would you make them pay. With thousands of pounds worth of legal fee's?

Home insurance is the one insurance that seems to me to be very very good value. I would take advantage of that.

[zaphod42]

And for quotes, try Ecclesiastical Insurance...

[Sir Bagalot]

What happens if

A visitor falls and claims negligence in respect of the upkeep of the building?

Or

Or the House burns to the ground.

What then?

Really not worth the risk for a few hundred pounds. Oh, and it's tax deductable!!

[mk1fan]

You need a policy that allows you to rent the property out. Landlords insurance.

Try the forums at landlordzone.co.uk for advice for new Landlords. It is very easy to get caught out.