Landlord insurance helps protect you, your properties and your tenants against certain risks. There are quite a few different covers designed for landlords; some more essential than others. Here’s all you need to know
Is landlord insurance a legal requirement?
Landlord insurance isn’t technically a legal requirement. But most mortgage lenders will require you to have at least buildings insurance for landlords in place (more on this below).
Tip: There’s no one type of insurance called ‘landlord insurance’. This term is used to describe a collection of insurance policies that are designed specifically to protect landlords and their properties.
When it comes to the question of whether or not you need landlord insurance – it’s important to note that normal home insurance doesn’t cover rental properties. So if you do want to protect your rental properties, you need insurance designed specifically for landlords.
What type of insurance do landlords need?
As a landlord, you generally need to have Buy to Let buildings insurance as a bare minimum (most mortgage lenders require you to have this). But, if you want to be well protected, for example if your tenants don’t pay, or content gets damaged, you’ll need some other types of cover too.
Landlord policies to consider include:
– Buy to Let buildings insurance: covers you financially if the building needs to be fully or partially rebuilt.
– Buy to Let contents insurance: protects the contents of your property, including furniture and white goods. It’s definitely worth thinking about getting contents insurance if you rent out furnished properties.
– Property owner’s liability insurance: protects you if a tenant gets injured or becomes seriously ill because of a fault at your property, and decides to bring a legal claim against you.
– Rent guarantee insurance: covers you if tenants don’t pay rent, so you don’t lose out on your rental income.
– Home emergencies cover: covers you for a range of property emergencies – things like leaks, boiler breakdowns and break-ins.
There are lots of optional extras available when it comes to landlord insurance, too. These can give you even more robust cover if you feel you need it. For example, you might want to take out loss of rent cover, which protects you if your property becomes uninhabitable. This is different to rent guarantee cover, which is to protect you if tenants don’t pay rent.
Landlord insurance providers will usually offer comprehensive policies that can be tailored to your specific needs. So, instead of having lots of separate policies, you’ll have one overarching policy that includes a range of different covers.
Who pays building insurance – landlord or tenant?
It’s down to the landlord of a property to pay for buildings insurance – never the tenant/s. Some landlords choose to pass this cost onto their tenants through their rent prices, though.
Multi-property landlord insurance
If you have a property portfolio, you’re likely to save money (and hassle!) by having a multi-property landlord insurance policy. This is where all your properties are covered by the same provider, under one overarching policy. Each property can still have its own unique types of cover, but it just means all your property insurance is handled under one roof.
There’s nothing to say you have to go down the multi-property insurance route. But you’ll probably end up spending a fair bit more if you insure all properties with separate policies.
Does landlord insurance cover tenant damage?
You can definitely get landlord insurance to cover tenant damage, but it’s not guaranteed under all policies. Some providers offer ‘malicious damage caused by a tenant’ as an add-on rather than including it as standard, for example. So it’s definitely worth checking this before you buy.
What’s the average cost of landlord insurance?
Research by NimbleFins shows that the average cost of landlord buildings insurance in the UK is £170 per property per year. But the truth is, the cost of insurance for landlords varies massively depending on a range of different factors. For example, the type of property being insured, the location of the property, and the different types of cover taken out all affect the total cost of the insurance.
How to buy landlord insurance
To buy landlord insurance, you can either shop around yourself, or use an insurance broker or financial advisor. It’s not essential to use a broker or advisor, but it’s worth noting they sometimes have access to better products and deals. It might make sense to get some professional help if you have a large property portfolio, but this probably isn’t needed for just one or two properties.
If you choose to shop around yourself, you should aim to:
- Try multiple comparison sites – not all comparison sites have the same products and deals.
- Try searching for and contacting insurance providers that aren’t on comparison sites – some companies offer you a better deal if you go directly to them. And quite a few companies choose not to be listed on comparison sites.
Do I need landlord insurance if renting to family?
You do still need to get insurance designed for landlords if you want to protect your property – even if you’re renting to family members. This is because conventional buildings and contents insurance won’t cover you for a rental property (no matter who it’s rented to).
One thing to bear in mind, though, is that you might not feel the need to take out things like liability insurance if you’re renting to your family (as you probably don’t need to worry about them bringing a legal claim against you)!
Do I need landlord insurance if I live in the property?
You do need insurance specific to landlords if you’re renting out any part of your property, even if you live in it yourself. This is because your usual home insurance won’t be valid if you’ve got one or more tenants.
Tip: you need to get permission from your mortgage lender to rent out any part of your property. And you need to make sure you’ve got a tenancy agreement in place, too, as landlord insurance providers will require you to have this.
Do I need landlord insurance for a flat?
The same rules apply around landlord insurance regardless of whether you’re letting a house or a flat. The only potential difference is that the flat might have a freeholder, who may have organised buildings insurance for the whole building. If this is the case, you’ll need to let them know you’re letting your flat. That way they can update the policy to make sure your flat’s covered.
In a nutshell: if you’re letting a flat then, yes, you need insurance designed specifically for landlords to protect your property.
How to make a landlord insurance claim
To make a claim on your landlord insurance:
- Call your insurance provider’s claims number.
- Tell them all about the incident that led you to make a claim and answer their questions in detail.
- Double check your excess, and pay this.
- Be sure to follow any advice your insurer gives around limiting damage to your property.
- Double check your insurance documents to find out what timelines you can expect when it comes to getting your payout.
- Send any paperwork, photos and evidence you insurer asks for.
- Be ready to meet with an assessor if needed – your insurer might want to take a look at your property to assess damage.
Also, be sure to call the police and file a report if your property is the subject of any illegal activity, like a break-in or malicious damage by your tenants.
Landlord insurance policies: key terms
Insurance jargon can get pretty heavy, so it’s important to ask your provider for clarification around anything you’re unsure of. Some useful terms to know are:
- Perils: an event that leads to property damage – your policy will outline exactly what’s covered here; things like fire, lightning and vandalism.
- Sum insured: the maximum amount of money your insurer will pay out for each type of cover – for example, for your contents cover it might be £25,000. You can choose what you want the sum insured to be when you buy your insurance.
- Rebuild cost: the amount of money it would cost to rebuild your property if needed. You can choose the rebuild cost you need to be covered for when you buy your insurance.
- Excess: the amount you have to pay upfront if you need to make a claim. Setting a higher excess lowers your premium, while going for a lower excess makes your premium more expensive.
- Exclusions: things that aren’t covered by your insurance policy. These usually include certain risks insurers won’t provide cover for, like natural disasters, as well as things like general wear and tear and pre-existing damage. All exclusions will be outlined clearly in your policy documents.
A quick summary
Landlord insurance isn’t a legal requirement, but mortgage lenders will usually require you to at least some form of cover. Conventional home insurance isn’t valid for rental properties – so it’s crucial to make sure you’ve got landlord-specific cover for the areas you want and to make sure you’re fully protected. The landlord insurance provider you choose will depend on circumstance and your preferences. For larger property portfolios, it can help to get advice from an insurance broker or financial advisor.
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