Insurance

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

Occupiers are usually responsible for providing their own contents insurance to cover their personal belongings. This is a matter for the occupier, and it is impossible 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. If the insurance company is not informed a property is rented out (instead of being owner-occupied), this is likely to invalidate the insurance. Any claim made will be refused, or any payout will be reduced. Remember that insurance cover, like the mortgage, may come with conditions attached governing the type of occupier that the property is let to.

There are particular policies for landlords that cover additional risks such as loss of rent and the cost of temporary accommodation where a property has been made uninhabitable due to an insurable risk. Insurance can also provide additional cover for the landlord if the occupier is injured due to an accident on the property and 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. Associations often offer lower-cost insurance to members.

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