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Landlord Insurance - What Is It and Do I Need It?

What is Landlord Insurance?

Essentially, landlord insurance is a policy put in place to protect your interests as a landlord when renting property to tenants.

It usually includes buildings and contents cover for your property, but it can also have additional features to cover financial protection for lost rent or legal disputes with your tenants.

Do I need it?

Although it is not compulsory, if you are currently or will be renting a house or flat to paying tenants or family members you should consider it.

It’s helpful to know that some mortgage lenders may require it for buy-to-let mortgages.

What does it cost?

The cost of your insurance policy will depend on a few things; the property, the tenant, the type of insurance you choose and the cover levels you need.

There are a number of different features you can have on an insurance policy, however, don’t be alarmed, many features are not that expensive and in most cases, you can bundle several types of policies into one policy.

What does it cover?

No two situations are the same and there is no single best solution.

With this in mind, it’s important to get the right cover for you. Although most features are recommended they are not always necessary.

Buildings Insurance

This is the main type of cover that a landlord will need, it covers the ‘Brick and Mortar’ of the property against damages including but not limited to:

  • Fire, explosion, lightning, earthquake and smoke damage
  • Storms or floods
  • Burst pipes and water leaks
  • Theft, attempted theft and malicious damage
  • Subsidence, heave and landslip

It is important to note that when taking out a Building’s Insurance policy you must insure the building rebuild value.

This is not the market value of the property or what you paid for it, this is the amount it would cost to build the property from scratch.

You can also opt for your cover to include sheds, garages and other outbuildings.

Contents Insurance

Regardless of whether you are renting a furnished, part-furnished or unfurnished property, this insurance policy is recommended.

Obviously, if you are renting on a furnished or part-furnished basis, you want to ensure that in the hands of your tenants your own contents are covered from theft and damage. This is a no brainer.

However, even if you are renting your property unfurnished, you can still make use of this cover for your carpets, fixtures and fittings. So make sure not to rule it out.

It’s important to look for an insurance policy on a ‘new for old basis.’ This means that the item will be replaced on a like for like basis.

You can add additional cover for ‘accidental damage’ such as wine spills on the carpet or tea on the furniture. Accidents happen, so be prepared for them!

Property Owner’s Liability Insurance

Being a Landlord means you have a responsibility to ensure your tenants live in an environment that is both well maintained and safe. In the event of an injury, illness, death or emergency arising due to negligence, legal action can be taken.

Property Owner’s Liability Insurance will cover you against this type of situation.

Similar to a lot of policies, this is not applicable to all landlords, but it is often a requirement if you offer student or social housing.

As you are in the dark about who is coming or going in your property, this cover can be invaluable in the unlikely event of death or injury to a third party.

Loss of Rent / Guaranteed Rent Insurance

If for any reason during a tenancy the property becomes uninhabitable preventing you from letting it for a certain period of time, with a rent insurance policy you can protect the rent you otherwise would miss out on.

This type of cover is usually included, however, you may have to pay extra depending on the level of cover you are looking for.

Loss of Rent Cover: If your tenants can no longer live at the property due to property damage this will cover the lost income and it is usually included as standard.

Rent Guarantee Insurance: This will cover your income if your tenant stops paying rent. This will also cover legal disputes and eviction costs.

If property investment is your primary source of income or in the interest of keeping your mortgage term to a minimum.

Legal Expenses Insurance

Although renting a property can appear to be a walk in the park, this isn’t always the case. Legal Expenses Insurance is in place to ensure that any small hiccups don’t affect you, financially.

Taking out this type of cover will help you with any legal costs following potential disputes with tenants, including evicting squatters, repossessing your home or covering the cost of defence against criminal activity.

In some cases, you can extend the policy to cover the legal costs of recovering any outstanding rent owed by the tenant.

Alternative Accommodation Cover

Following a report of a problem such as a fire or a flood, there can be a period in-between before the property is officially labeled uninhabitable. In this period either you or your tenants may be a little stuck and finding yourself having to pay out for temporary accommodation.

Alternative Accommodation Cover provides you the safety of moving your tenants or yourself into a temporary accommodation whilst repairs are made.

This again is not a temporary cover and can be requested as an add-on for your landlord insurance.

Loss of Keys

Losing a key isn’t hard, and we have seen it happen multiple times.

Dependent upon your circumstances, if your keys are lost or stolen, you can take out a policy that will provide cover up to £2,500 for a replacement set.

To Summarise

There are a lot of different policies that can be featured on a landlord insurance policy. Some such as Building’s Insurance are essential, whereas others such as Legal Expenses Insurance are not, however, they all share the common ground of being important in their own way. There are no two situations that are the same and there is no single best option.

Of course, don’t forget, we’re just at the end of the phone should you need us.

We are an Insurance Broker with over 25 years of experience dealing with landlord’s insurance, combine this with our free, no obligation advice and quotes and we think we make a great choice for your insurance – though don’t just take our word for it, see what our clients are saying.

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