What is landlord insurance?

As a landlord, it is important to get the right insurance to cover your property and legal responsibility to your tenants. Here is what you need to know about landlord insurance.

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How does it work?

Landlord insurance includes buildings and contents cover for your property, plus 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 meet 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.

What does it cover?

It varies depending on the insurer but most landlord policies include:

  • Buildings insurance

  • Contents insurance

  • Property owners' liability

  • Loss of rent

  • Rent guarantee

  • Home emergency cover

Buildings insurance

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, not the market value or what you paid for it. You can check this on the Association of British Insurers' website.

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.

What does building insurance cover?

Contents insurance

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.

Here is more information about what contents insurance covers

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.

Rental income

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.

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 often no excess to pay if you claim, but a maximum limit of £500 per claim usually 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.

Here is more information about what home emergency covers

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.

Here is how to make a claim on your landlord insurance

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