It’s a common question among new or soon-to-be landlords – do I need landlord insurance?
The short answer is yes. In addition to healthy investment returns, being a landlord comes with a lot of added risks and responsibility. To minimise this risk, investing in reliable insurance is essential.
Protecting your investment is paramount, but the jargon around landlord insurance can make it tricky to keep your facts straight.
We’ve curated a simple, yet comprehensive guide for landlords to help you get your head around landlord insurance and work out which type is best for you.
Here’s what it is, how it works and how to get it.
Landlord insurance is a type of home insurance, specifically designed for rental properties. This broad term can include anything from contents insurance to rental protection.
Your policy could cover;
While landlord insurance isn’t a legal requirement, standard home insurance will not cover you for rental properties and going without could cost you dearly in terms of money, time and hassle.
Often, you will need permission from your mortgage provider in order to let your property to tenants who will most likely require specialist insurance.
Legal issues aside, it’s always a good idea to protect your property as comprehensively as possible to protect both yourself and your investment.
Home insurance is designed to protect private homes from damage and loss. A rental property comes with a whole host of different issues. For example, as a landlord, you are less able to keep an eye on the day to day happenings in the property and have to rely on tenants to update you on any problems that occur.
Here’s a few of the differences between home and landlord insurance;
Here, we provide a brief overview of the different types of landlord insurance available;
Buildings insurance covers any damage caused to the building itself. This could mean damage from fire, flooding or even malicious damage caused by the occupants. Every insurance provider is different, so you’ll have to check which type of damage this covers.
We highly recommend getting buildings insurance, especially if you are the freeholder.
Contents insurance protects against loss or damage of goods and furniture within a property. So, if you are renting a furnished property, it could be a good idea. However, this type of insurance does not protect against normal wear and tear.
Different insurance plans offer various cover and allow you to insure different parts of your property. For example, communal areas in flats or shared accommodation. It won’t protect items belonging to tenants.
Accidental damage insurance comes under contents insurance and can cover the cost of anything from spills and stains to broken windows.
Otherwise known as rental protection insurance or loss of rent insurance, this type of cover protects you if you are unable to rent out your property as a result of an insured event like a fire or flood.
Tenant default insurance covers you if your tenant fails to pay rent for two months, covering the cost for up to eight months. You will need to conduct the proper credit checks at the start of the tenancy to be eligible.
If you let to a third-party business, you will need commercial landlord insurance. Commercial buildings have different designs and purposes, meaning there are different risks attached.
Commercial landlord insurance can cover accidental damage, vandalism and rental income protection.
Also referred to as property owner’s liability cover, this type of insurance covers legal defence costs and expenses in the event your tenant has an accident and considers it your fault.
With this type of insurance, you’re looking at high limits, usually upwards of £1 million.
This covers legal expenses such as court costs when chasing up late tenant payments and gives you access to legal expertise.
If you employ anyone else to work at one of your rental properties, say as a gardener or cleaner, you are required by law to have this insurance. Employers’ liability covers legal defence costs and awards made for any injuries, accidents or illness as a result of your negligence.
If you rent out an HMO property, the terms of your insurance cover will differ slightly from single occupancy homes.
Finding an insurance plan tailored to HMO properties could help you get the protection you need.
If your property becomes uninhabitable due to an insured event and the tenancy agreement requires you to provide alternative accommodation for your tenants, this type of insurance is a good idea.
Unoccupied property cover can help during void periods or if you need to make renovations to your property. To qualify as unoccupied, a property usually has to be vacant for 30 days.
You will also need to arrange for regular vacant property inspections.
If you have several properties in your portfolio, it is probably worth taking out multi-property landlord insurance.
By including all of your properties on one policy, you could save money and time on paperwork and other processes.
Boiler breakdown or serious leaks are a surprisingly common occurrence. Landlord home emergency insurance provides you with 24/7 access to emergency cover for plumbing, heating, power and security issues.
The type of insurance you’ll need depends on the type of property you rent and your specific needs as a landlord. We answer some common questions;
In most cases, you will need to take out a specific insurance when renting out a property in addition to your home buildings insurance.
Some policies may allow you to amend your existing home buildings insurance to cover your activities as a landlord, however you may also want to take out extra insurance to cover all bases.
Yes. It is just as important to have insurance when renting to family members. You will need to draw up a tenancy agreement for legal purposes, even if it’s just a casual arrangement.
Renting to offspring or siblings may feel informal, but if they are paying you rent, you are legally regarded as their landlord and standard home insurance won’t cover you.
Even if you live in the property, standard home insurance won’t protect you. Make sure you tell your lender that you live in the rental property when you take out the insurance. Again, you will need a tenancy agreement in place.
Renting out a flat is the same as renting a house when it comes to insurance.
The only difference with renting a flat is that you may not need buildings insurance if there is a freeholder arranging this. Be sure to inform them that you are renting out your flat so they can make any adjustments to their insurance policy.
Again, standard home insurance is unlikely to be valid when renting out a room in the same property you live in.
If you have a lodger, you will need a tenancy agreement in place for your landlord insurance policy.
Landlord insurance can cover a variety of different risks and situations, depending on your needs. The basics are buildings and contents cover, but you can add extra policies as you see fit.
We answer some common questions about landlord insurance cover;
Yes. If you want your insurance policy to cover accidental damage such as dodgy DIY or carpet stains, opt for accidental damage insurance to protect your property.
Yes. Contents insurance covers white goods and appliances provided by you in the rental property.
Yes. To protect yourself against legal claims made by tenants, landlord liability insurance will provide legal defence costs and expenses.
Yes. Tenant default insurance covers you if your tenant fails to pay rent for two consecutive months.
Your first step in purchasing landlord insurance is to decide what type of cover you need. It’s possible to find a tailored policy suited to your individual needs and requirements. Whether you opt for basic cover (building, contents and liability) or go for comprehensive cover, make sure you read the fine print to find out exactly what’s included.
The sum insured is the amount an insurer will pay out for a claim. The higher the value of your rental property, the larger this amount will be. Make sure the sum insured is enough to rebuild your property, rather than focusing on its market value.
Calculating your rebuild cost accurately will ensure you don’t overpay for your insurance. There are online rebuilding cost calculators to help, although keep in mind, this will only provide you with an estimate rather than exact values.
You will also need to think about the amount of excess you are able to pay if you need to make a claim. Higher excess reduces the cost of your insurance and different claims can come with different levels of excess.
Before you buy you will need to know;
If you ever need to make a claim, make sure you do so as soon as possible. You will need to provide as much evidence as you can to get the best pay-out. This could include receipts, invoices and photographic evidence.
The cost of your landlord insurance will be dependent on a variety of different factors;
To compare landlord insurance and get a landlord insurance quote, there are plenty of price comparison sites to reference.
Here are some popular landlord insurance providers;
Makes sure you shop around and do your research to get the best deal for you.
We understand the importance of protecting your rental property for the long-term success of your business.
A detailed property inventory is one of the best ways to secure your property by providing the critical evidence you need to recuperate costs. Find out more about our professional, unbiased property inventory service to get started.
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