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You have to be sure you are covered against tenant troubles by taking out landlord insurance – spending a little now could save you a whole lot more in the future.

Many people may have fallen into landlording over the last few months as a means to earn extra money while the housing market picks up. But for those unfamiliar with the process must ensure they have adequate landlord insurance in place in the event of any financial losses is crucial, according to moneysupermarket.com.

The website says results from the final quarter of last year saw the lowest ever sales of properties by landlords, as two fifths of surveyors reported a rise in new tenant lettings, and only 0.2% of landlords chose to sell their property at the end of a tenancy.

Steve Sweeney, head of home and motor insurance at moneysupermarket.com, says: "Whether you are downsizing your property to save money, or are a reluctant seller waiting for the property market to pick up, it is essential to have sufficient insurance to cover any financial losses connected with letting out a property."

According to the comparison site, standard landlord insurance is available from as little as £117 a year, which covers rent not being paid in the event of damage to the property. However, additional fees will also provide landlords with cover for legal expenses should they arise from incidents such as repossession, tenant default, and debt recovery.

Sweeney says: "It is important to have a good contract in place to know where each party stands should the ‘tenant and landlord' relationship fall sour. If things go badly wrong and legal proceedings commence, the associated cost can be hefty. I advise insuring yourself against these circumstances before they arise, it is always better to be prepared and there are a number of suitable insurance policies for landlords on the market."

SOURCE: Moneysupermarket.com, 01/06/09

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