Monday, January 07, 2008

Landlord's Insurance Policy - Pathway To Property Security

By John Dale

Renting out a property has proven to be one of the most profitable investments in the last decade. The risks associated with poorly behaved or unconcerned tenants make rental properties an investment that is fraught with risk and this is complicated by the lack of risk cover available on the market. Landlords insurance that does the job and protects investors from the risks posed by propery investment and is essential to maintain profitability.

Even if a Landlord takes a damages deposit from its tenants, still when they leave the landlord may be spending huge amount of cash in fixing the property and getting it ready for future rent outs. The security deposit paid by the tenant is just 1 or 2 months advance. This amount of money is not even enough to change the worn out carpets, or to change a kitchen ware, or even repair the washrooms.

Many tenants carry no insurance of their own, safe in the knowledge that the landlord must by law cover risks associated with maintaining the property in habitable condition. If a property defect causes any injury to a tenant, for instance tripping over loose carpet on the stairs, then it makes sense to a tenant to sue the landlord for damages and there are numerous judgements in favour of tenants just for this sort of situation.

As the market for letting out property is maturing so is the insurance policies. The policies are becoming friendlier towards the Landlords then the tenants. Nowadays it has become very difficult for the lawyers to win cases against Landlords by the tenants due to these evolving policies. These landlord insurance policies are now not just protecting against fire or thefts but also against all such heavy claims that can be costly.

No matter how high premium you are paying, it is much more important to determine the ability of the company to settle the claims. Each passing week means another week of unsettled claim and another week of rising mortgage cost. If the insurance company does not have a good reputation when it comes to settling the claims then this type of landlord's insurance is of no use. There are other factors that need to be considered as well for example whether you will need to handle the cost from your own pocket before the company will reimburse your finances.

There are many factors that are applied to a landlord's insurance policy and you need to be aware of all of them. Before you get insurance make sure that you know what is being covered, if this is according to your needs and if it also covers what your tenants will claim. May be you have to pay a lot of money in form of premium, but in the long run your claims will be handled properly. The risk of loosing your property will be nil so it is worth paying such an amount to your insurer.

Usually the tenants do not care much about the hard earned property of the landlords and thus do not treat it with respect or the way as if it was their own. This further contributes to the risk factor associated with the property.

Closely scrutinise any policy documentation and take pains to compare like with like when choosing your insurer and policy. Do not settle for second best when it comes to insuring your buy-to-let property and remember, you are not just insuring bricks and mortar but your own financial security.

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