Every good landlord worth his or her salt will have considered the benefits of legal cover or insurance before letting their property to tenants or placing it in the hands of an agent. While nobody wants to think about the possibility of lengthy disputes, rising legal costs, and the threat of repossession, it is important for landlords to protect their property – and their own financial responsibilities – in case the worst happens. No matter how amicable things may seem in the beginning, it is vital that landlords protect their assets and rights with legal expenses cover. What does this involve?
Landlord legal expenses: The FAQ
Although it is not exhaustive, the following FAQ should help landlords to decide whether legal expenses cover is for them whilst providing some insight into what this kind of insurance offers. While grievances with tenants can be a nightmare, landlords also need to think about their dealings with agents, contractors called to work on the property, and health and safety protocol. Is remaining uninsured a risk that landlords should ever take?
What is legal expenses cover?
Legal expenses cover is an easy enough concept to understand, although different policies will incur different terms and conditions. Put simply, it is a type of insurance that will cover the legal expenses that are incurred following an issue with a rental property. If a landlord needs to start court proceedings against a tenant or former tenant, legal cover will ensure they are not out of pocket in doing so. This is particularly important if they have not been in the wrong at any point. Legal cover can also be used to aid an eviction, assist with expenses if damage is caused to a property, or help a landlord to chase unpaid rent. Any time legal costs have been incurred, legal expenses cover can help to recoup those losses.
How important is legal cover?
Legal cover, alongside landlord insurance, is vital for any landlord. Not only does such cover provide peace of mind to landlords, but it is also a valuable backup should the worst happen. Landlords with such cover can rest assured that they’ll be able to take the necessary action and not be left out of pocket. The cover usually provides a dedicated 24/7 legal helpline which can be invaluable when dealing with matters relating to tenants.
What disputes are covered by legal expenses insurance?
While individual policies will offer different things, landlords will often find the following disputes covered in whole or in part:
- General property disputes resulting in court action
- Legal action because of improper repair or renovation
- Legal action brought against the landlord in cases of health and safety breaches
- Tax investigation
- Recovery of rent arrears
Do tenants and agents need to consider legal cover?
Tenants who find themselves on the receiving end of a dispute are well within their rights to seek advice from a solicitor or the citizen’s advice bureau, although there are few dedicated insurance policies for the sole purpose of covering legal expenses. Types of cover that a tenant should be investigating include contents insurance and tenancy liability insurance. While the former is useful for the replacement of lost, stolen, or damaged items, the latter will aid tenants if their rental property is damaged. It is essential that tenants understand the terms of their rental agreement and the penalties for faltering on any of the conditions.
Agents, on the other hand, can opt for a variety of policies, including public liability insurance, professional indemnity cover, business interruption insurance, and legal expenses insurance. Agents would do well to understand all of the legal jargon before settling into their profession.
Landlords aspire to a simple life with very little aggravation, but it can be reassuring for them to know that they’ve got cover in place in case the worst happens. Is it really worth the risk of foregoing this cover?