How does it work?
Landlord insurance includes buildings and contents cover for your property, and financial protection for lost rent or legal disputes with your tenants.
It is particularly important to have the right cover in place if you rely on your rental income to pay your monthly mortgage payments.
Do you need it?
You should consider landlord insurance if you do either of the following:
Rent a house or flat to paying tenants
Rent a house or flat to paying family members
Some lenders insist you get insurance before they offer you a mortgage, but it is not a legal requirement.
If you let a holiday home, you can compare specialist holiday let insurance here.
You do not need landlord insurance, but you should check if this is covered by your home insurance.
Speak to your mortgage lender to check you are not breaking the terms of your mortgage agreement.
What does it cover?
It varies depending on the insurer but most landlord policies include:
Property owners' liability
Loss of rent
Home emergency cover
This covers the cost of repairing or rebuilding your property if it is damaged by:
Fire, explosion, lightning, earthquake or smoke
Weather, including storms or flooding
Burst pipes or water leaks
Theft, attempted theft or malicious damage
Subsidence, heave or landslip
You must insure the rebuild value of your property, rather than the market value or the price you paid for it.
Accidental damage can also be added to most policies, but you may have to pay more to include this.
If you own a flat, check whether it is already insured by your management company to avoid paying for cover you do not need.
This covers damage to the contents of your rental property, like curtains or fitted kitchen appliances.
Even if your property is unfurnished, you may still need some contents cover for things like carpets and flooring, light fixtures and fitted kitchen appliances.
You do not need to cover your tenants' contents as they should have separate insurance in place to protect their personal belongings.
Property owners' liability
You have a duty to provide your tenants with a home that is well maintained and safe to live in. If a tenant is injured, falls ill, or dies because you have neglected this duty, you could be sued.
Property owners' liability covers compensation to third parties if they are injured or ill due to your negligence. Cover is usually limited to £1 million, £2 million or £5 million.
The Association of Residential Letting Agents (ARLA) website has more information about your duties as a landlord.
Most landlord insurance policies come with rent protection, but you may have to pay extra depending on the cover you are looking for:
Loss of rent cover: This covers lost income if your tenants cannot live at your property due to property damage, like a fire, and is usually included as standard. You can read more about choosing the right loss of rent cover here.
Rent guarantee insurance: This covers your rental income if your tenants stop paying rent. It also covers legal disputes and the costs of evicting tenants. Here is more information about rent guarantee insurance.
Protecting your rental payments is especially important if you rely on them as your main source of income, so compare landlord policies to make sure you get the right cover.
This is how long you can continue claiming for loss of rent. You can usually choose between 12, 24 and 36 months.
Think about how long it would take to have your property rebuilt if it were destroyed by a fire, and allow enough time so that your rental income is covered and your tenants have somewhere else to live.
Home emergency cover
This provides immediate help if there is an emergency at your property, like a boiler breakdown or a serious water leak.
There is usually no excess to pay if you claim, but a maximum limit of £500 per claim applies and only the immediate cause of damage will be repaired.
If you need cover for your boiler and heating system, you could get specialist boiler insurance which can be added to your landlord policy or bought as separate cover.
How much does it cost?
There are several things that affect how much you pay for your landlord insurance, like:
Location: This affects how likely you are to make a claim, so you may pay more if local crime rates are high or your property is built in an area with a history of flooding.
Number of properties: The more properties you insure, the more you pay. Compare landlord insurance and check for insurers who offer portfolio property discount.
Property size: The more tenants you have in your property, the bigger your chance of making a claim, so you may pay more for your insurance.
Sums insured: The larger your sums insured, the more your insurance costs. Make sure your sums insured are accurate to avoid paying for cover you do not need.
Type of tenants: Some insurers charge more for rental properties that are occupied by students, tenants with pets, or people claiming housing benefits.
You may also pay more if your rental property is empty, although most insurers will only offer cover for unoccupied properties up to 90 days. If your property is likely to be vacant for longer than this, you may need specialist unoccupied home insurance.
Do not be tempted to underinsure or give false information to save money on your premium, as it could affect whether your claims are paid.
Here is more information about how to save on your landlord insurance.
What is underinsurance?
This is when you underestimate the value of what you are insuring and give your insurer a lower figure than you need.
Underinsuring could mean your claims will not be paid in full, so you should always give your insurer accurate figures for your buildings and contents.
Most insurers will apply the average condition where all claims are scaled down to the percentage you have underinsured by, even if you do this by mistake.
For example, you insure your building for £100,000 when it has a rebuild value of £200,000, so have underinsured by 50%. If you then claim for £50,000, you will only receive £25,000.
How do you make a claim?
Claiming on your landlord policy works the same as with most other insurance.
You should contact your insurer as soon as possible if you need to report a claim, using the number in your policy documents.