Many of those who are new to the buy-to-let market make the mistake of taking out ordinary buildings and contents insurance policies on their properties. Making the assumption that all residential property policies are the same can prove to be expensive, however. If, for any reason, a landlord tries to make a claim on these policies, it will be rejected by the insurance company. Renting out a house or flat to tenants will have invalidated the policies and left the landlord inadvertently without cover.

Having invested a considerable amount of money in buying, renovating and furnishing the investment property, this can sometimes be a disaster if the damage the building or its contents have suffered is substantial.

If you have bought a property specifically to rent out, or are just thinking of renting your own home to tenants, it`s very important to arrange the right kind of insurance to avoid these kinds of risks. There are many providers of landlord insurance, also known as buy-to-let insurance, to choose from. You will need to compare the features and benefits of such policies as there variations in the kind of cover available. It is not always about price, since the cheapest policy may not be suitable to your property or the type of tenant you are renting to.

Landlords are faced with numerous potential problems when renting out and insuring an investment property. Having to take a tenant to court for non-payment of rent can prove time consuming and very expensive, with both legal costs and lost rental payments to consider. If tenants or their visitors have an accident in a rental property, they could try to sue the landlord for damages. If the injury suffered was serious enough, the cost of this could be enormous.

Main Features of Landlord Insurance
Buildings insurance covers the property that is rented out against such things as fire, flood damage and vandalism. You need to insure it for the amount that it would cost to repair or rebuild.

Contents insurance will pay for the cost of replacing any items in the property that are damaged accidently. It`s important to make sure that things that are expensive to replace are covered, such as furniture, washing machines and other white goods, carpets and curtains.

Landlord`s liability insurance protects you against any claims made by a tenant or anyone else in the house that has been injured or hurt. Personal-injury claims can be very expensive, so this element of landlord insurance is important to remember.
Optional Extras available with Landlord Insurance

For an additional cost, you can add in extra cover such as public liability insurance, legal expenses` cover in case you need to take the tenant to court and rent-guarantee insurance.

Other Points to Consider
Some providers offer home emergency cover that will pay for the cost of paying a plumber, for example, to come out to fix a leak.

Providers of landlord insurance will often offer a discount on the premium if you insure several rental properties with them on the one policy.

You should expect to have an excess to pay in the event of a claim, which is standard practice with most types of insurance.

Check to see if the provider covers all types of tenants. Some do not allow students or those on housing benefit as tenants.

Finally, if you need to arrange finance for the purchase of a rental property, then you may wish to look at buy-to-let mortgages at Moneysupermarket, where you can compare the various deals on offer from a broad range of lenders.