What is landlord insurance? An in-depth guide for property owners

Owning a rental property carries certain risks, especially when tenants are involved. Landlord insurance helps protect you and your property if things go wrong.

Key takeaways

• There are many different types and levels of landlord cover. Take time to consider which is best for you

• Costs depend on property location and size, as well as tenant type

• Be sure to review your landlord insurance options each year

What is landlord insurance?

Landlord or buy-to-let insurance is a broad type of cover designed for people who rent out residential or commercial properties to private tenants.

Because tenants and property needs can vary widely — even within the same building — policies differ significantly in what they protect and to what extent.

The more common benefits of landlord cover, across various types of policy, include protection from:

• Losses caused by damage to or destruction of the property

• Losses incurred through damage to or destruction of contents at the property

• Personal injury claims made against the landlord

• Loss of rental income if the property becomes uninhabitable, including due to flood damage

• Loss of income if tenants can’t or won’t pay 

• Legal assistance for eviction cases

What are the different types of landlord insurance?

Landlord insurance policies offer protection against a variety of potential problems. All are widely available, many as add-ons to the core buildings insurance policy.

Here’s a closer look at the main types of landlord insurance:

Buildings insurance

As with standard homeowner buildings insurance, this type of policy protects your flat, house, block or office complex from events that could damage or destroy the property’s structure. The insurance covers repair or rebuild costs following incidents including fire, flood, storms and subsidence. 

This type of cover is typically the minimum a landlord should consider and is usually a requirement of mortgage lenders.

Contents insurance 

Contents insurance covers the cost of repairing or replacing items you provide in the rental property for your tenants’ use. This might include curtains, blinds, furniture, kettles, TVs, Wi-Fi routers, or pots and pans.

If you only provide basic items — such as beds, kettles, toasters, or white goods — you might prefer to pay for any damage yourself rather than make an insurance claim. Alternatively, you could choose cover for specific types of contents, such as home appliance insurance, which protects items like fridges, freezers, dishwashers and washing machines.

Flat insurance 

If your property is in a leasehold building, or it shares access to a garden or other common area, such as a bike shed or driveway, you may need flat insurance. This cover protects fixtures, such as fitted kitchens and bathrooms. 

Unoccupied property insurance

This type of cover safeguards your property between occupancies. If you own a commercial property catering to a specialised business or a residential property that requires renovation, for example, this insurance can protect you from issues arising from vandalism, theft and water or oil damage for 90 days or more, instead of the usual 30, 45 or 60 days.

Rent guarantee insurance

Rental income depends on tenants paying for the service you provide. If your property suffers flood damage, for instance, this policy covers your loss of income and, potentially, costs associated with arranging alternative accommodation for your tenants. It’s worth noting that some mortgage lenders require rent guarantee cover on any properties they finance.

What optional extras are available?

Several additional levels of cover are available for landlords to consider when entering the rental market. Depending on the type of tenant you intend to have, the location and use of the premises, you could think about the following:

Landlord accidental damage insurance

This form of cover protects against genuine blunders, such as spilling a glass of red wine over the carpet or children kicking a football through the kitchen window.  

Landlord liability insurance

According to insurance company National Friendly, falls account for 34% of home accidents, making them the most common cause of injury for UK adults. In many cases, it’s just an embarrassing tumble, but more serious incidents could lead to a claim. This is where liability insurance can be helpful. It’s also worth noting that cover extends to delivery services, guests and tradesmen.

Landlord legal expenses cover

While accidents do happen, someone inevitably has to foot the bill. Landlord legal expenses insurance helps pay for legal advice, representation and court costs if you need to take action against a tenant who damages your property. It can also protect you if you need to take legal action to evict a tenant, get rid of squatters or fight claims that you are in breach of your tenancy agreement. 

Malicious damage cover

Some landlord insurers offer policies that protect against wanton damage and destruction by disgruntled tenants or employees. It’s worth noting that malicious damage caused by someone who doesn’t have a legal right to be on the property may come as standard. 

Home emergency insurance

Landlord boiler repair insurance covers the costs of callouts, parts and repairs. Policies tend to include an annual boiler service to ensure you have a gas safety certificate. Some cover also protects related systems, including central heating.

What doesn’t landlord insurance cover?

Standard landlord insurance policies cover costs arising from routine accidents like spills to more exceptional events, such as floods. But certain occurrences are usually beyond the scope of standard policies and even where they are available, perhaps as an added extra, cover limits are low. Exclusions typically include:

• Wear and tear – Damage that occurs naturally over time, such as worn carpets or chipped paint

• Tenant negligence – Failure to inform the landlord of a leaking pipe, loose roof tile or blocked gutter that leads to avoidable damage

• Illegal activities – Criminal actions or neglect that result in property damage (such as from a marijuana farm or as a result of unlawfully tapping a neighbour’s power supply) 

• Tenants’ belongings – Landlord contents insurance usually just protects your items, not those of your tenants

• Pest damage – Costs associated with removing pests or replacing items, such as gnawed wiring, infested furniture or woodworm-eaten fittings, are not typically included in landlord cover. Protection for damage caused by a tenant’s pet might be provided with the right policy

• Malicious damage – Although this may be available as a bolt-on to standard policies, it’s worth remembering that you could cover repair costs by using the offending tenant’s deposit

How much does landlord insurance cost?

The cost of landlord insurance differs depending on various factors, including the following characteristics of the property:

• Location

• Size and type 

• Rebuild cost

• History of previous claims (such as flood damage)

• Age 

• Use (if commercial)

Exact costs differ greatly, so it’s difficult to make precise estimates. But research by insurance firm NimbleFins offers some insight. For instance, the average annual premium for a residential property is £226. The quotes are for properties in a medium to large town, which have a rebuild value of £200,000. The average cost of landlord insurance for a semi-detached house is £177, rising to £344 for a detached house.

How to keep the cost of landlord insurance down

The right landlord insurance for your property won’t be cheap, but you shouldn’t be tempted to save money by opting for inadequate cover. There’s little point in buying a policy that lets you down the first time you need to lodge a claim. 

Instead, consider ways to reduce the cost. Here are some tips that may save you money:

• Pay annually – A one-off up-front payment is preferable to making monthly or quarterly payments, because the latter options attract interest charges

• Boost your security – Break-ins are a major threat to landlords. Install good-quality door and window locks, along with security lighting and even CCTV, to make your property less of a target

• Build a relationship with your tenants – Encourage your tenants to contact you if they spot anything that could lead to a claim, such as a leaky pipe. Also, make it clear they should report any lost door keys, so you can replace the locks and issue new keys

• Inspections – Agree on a regular slot, perhaps every three months, when you can gain access to the property to check everything is fine and to listen to any concerns your tenants have 

• Consider self-management – If you live near your rental property, consider self-managing rather than using a management company. This could save you a considerable sum. It would also enable you to build a relationship with your tenants and you would be responsible for selecting your own landlord insurance

• Take a decent deposit – A sizeable sum may encourage your tenants to look after the place. Put the money in a savings account, so you earn interest and don’t accidentally spend it

• Vet potential tenants – Get references and speak to their previous landlords, so you’re aware of any potential red flags

• Shop around for cover – Use comparison sites to get a broad overview of the marketplace and consider policies that combine a few of the key benefits or types of landlord insurance

• Avoid making unnecessary claims – Making small claims, especially if there is an excess to pay, can be counter-productive. You may only get a relatively small proportion of your outlay back, and it could also affect future premiums

Do I need landlord insurance?

Landlord insurance shares many features with standard home insurance. Just as your mortgage lender requires you to have buildings cover for your own home, they will usually insist on similar cover for a rental property. Likewise, just as you might choose to insure your home’s contents, it can be wise to protect any items you provide for your tenants, such as curtains, furniture, or TVs.

Is landlord insurance a legal requirement?

Landlord insurance isn’t mandatory, but that doesn’t mean you won’t face a legal claim if a fault at your property leads to tenants losing their belongings or incurring financial damage, such as loss of earnings if they work from home. Also, you must comply with government requirements, such as giving tenants a copy of the How to Rent checklist. 

Additionally, if you have a mortgage, your lender may insist on you having buildings cover. To forego this could see legal action being taken against you.