The start of your tenancy is drawing near. Consideration now needs to be given to other aspects of your business:

• insurance
• banking arrangements
• paperwork
• recording your property’s particulars
• your personal safety.

Insuring Your Property

Paying for insurance cover is a good way to protect your property and reduce the risk to your investment.

Sourcing an insurance policy

Your property will probably be classed as commercial rather than domestic by insurance companies, as you are renting it out. This means that many sources you will be familiar with through advertisements, and from your own home insurance policies, will not be available to you on this occasion. Most of the direct-only companies will not deal with rented property.

Many of the remainder impose restrictions on your cover, especially if you want to let to students.
Despite ruling out so many familiar names, there are still insurance sources available to you:

• through your letting agent
• through your mortgage provider
• through the company with which you insure your own home (they may be willing to extend your existing policy)
• through insurance companies who deal in commercial or business cover (try an Internet search)
• through an insurance broker.

Checking the cover

An insurance policy can provide cover for:

• the building
• the contents
• the rental income
• other liabilities.

Insuring the building

The structure and fabric of your property is insured under this section, providing protection against such events as fire, flood, falling trees, etc.

Insuring the contents

The contents cover should be applied only to the contents you supply. It is your tenant’s responsibility to supply insurance cover for his or her own belongings. For many insurers this is the section that causes them most concern, as tenants are seen as posing a high risk to contents.

Insuring the rental income

Business interruption, consequential loss and similar terms are used to mean an insurance cover which will make up lost rental income if damage to the buildings or contents, as defined as allowable in other sections of the policy, prevent you from receiving the full rental income.

Your annual rental income is the sum insured in this case.

Insuring against other liabilities

Some policies will offer extra cover, sometimes optional, at an additional cost, and sometimes as part of the standard package. It is worth checking the small print or asking the insurance agent for details. Extra cover may include:

• Employer’s liability. Only valuable if you employ someone directly.

• Public liability. Useful cover against a claim by a member of the public (possibly including your tenant).

• Legal costs. Costs of certain legal proceedings may be met but check how relevant this may be to your circumstances. A legal helpline is sometimes offered to provide instant legal advice over the telephone but again check whether queries pertaining to renting and letting can be handled.

• Personal accident. Provides cover for you, and possibly any joint owner, in the event of you sustaining injury.

Practical tips

• Read the small print or ask your insurance agent to go over the detail.
• Watch out for exclusion clauses.
• When shopping around, make sure you compare like with like.
• Check you are not being asked to pay for cover you don’t need.
• You may already have sufficient personal accident cover under another policy.
• Consider index-linking your policy so that it keeps in line with rising inflation.
• Check if there are any discounts available to you.
• Check whether the premium you are quoted includes Insurance Premium Tax 
• Inform your insurance company of any changes which occur after the start of your policy, as failure to do so may invalidate the cover.