The life of a landlord is unpredictable. When dealing with issues including exterior building damage, loss of contents, rent arrears, and compensation claims, one thing you should be able to consistently rely on is the protection granted by a reputable insurance policy. Though landlord insurance is not a legal requirement in the UK, choosing to opt into a strong plan can save you thousands in unexpected pay-outs down the road. And, despite what many believe, standard home insurance does not address the specific needs of a landlord during a tenancy.
Before granting tenancy to a new resident, it’s smart to ensure that you are adequately protected from financial risk. This means doing some due diligence in researching essential and supplementary insurance policies. Take a look at our guide below to better understand what essential cover you need from your insurance policy, and the difference between different types of landlord insurance (each of which offers unique protection).
If you have a mortgage on your property, chances are your lender will require you to purchase an insurance plan before granting you permission to enter into any potential tenancy. Many insurance providers offer all-inclusive landlord insurance policies that cover all the three liabilities described here. Make sure to find a comprehensive plan that allows you to stay ahead of risk and tailors to your building-specific needs.
Landlord liability insurance
Landlord liability insurance covers a property owner in case a tenant or visitor acquires an injury on the owner’s grounds. This type of insurance mitigates risk and protects against large compensation claims in light of accidental property damage or bodily injury – including death, disease, or illness. Take for example, an accidentally unhinged, uneven floorboard. Without looking, a tenant walks through and slips, resulting in serious injury. Such accidents happen even for landlords who exercise the utmost care. Though technically optional, landlord liability insurance is usually included as standard in landlord insurance policies.
Landlord building insurance
Landlord building insurance ensures that a building’s structure is protected, along with any fixtures and fittings that are affected by weather conditions, fires, or accidents. Such events include but are not limited to: exterior storm damage, burst pipes, boiler issues, fire damage, heating installation malfunctions, and flood-induced wall damage. Building insurance also covers public liability, in case your property has caused damage to a neighbour’s property. However, building insurance does not protect the contents of a property, such as furniture.
Landlord contents insurance
Landlord contents insurance is essential when renting out a furnished property but can also be helpful in protecting staples in unfurnished units, such as white goods, carpets, and curtains. This type of insurance covers the cost of replacing or repairing a landlord’s items found in a tenant-occupied space. Contents insurance protects against an item’s damage or destruction, whether at the hands of a tenant or a natural phenomenon. Most common contents insurance claims include water damage, storm damage, and accidental tenant damage.
The following forms of insurance can be purchased as standalone policies or optional add-ons to your standard landlord cover. Remember – there are more risks associated with being a landlord than you might anticipate. These optional add-ons may seem excessive but, in times of trouble, you’ll be grateful for secure coverage.
Rent guarantee insurance
This covers rent income in case a tenant is unable to pay their rent, with policies usually covering a period of six to twelve months before renewal is required. Rent guarantee insurance is also often paired with cover for legal expenses related to regaining vacant possession of the property or recovering rent arrears (see more below). Rent guarantee insurance becomes especially helpful if a landlord aims to go forward with eviction, which more often than not goes on for the better half of a year. This is a long time to cover your expenses without any rental income, leading to cash flow issues and several sleepless nights.
Legal Expenses Cover
As stated above, legal cover is often combined with rent guarantee insurance. This insurance is meant to protect landlords in potential legal disputes with tenants. Legal issues include but are not limited to: property damage caused by tenants, eviction, unpaid rent, and compensation claims. For matters of legal defence, this type of cover provides access to a provider’s legal helpline, as well as a tax helpline in case of you are subject to a tax enquiry by HM Revenue and Customs.
Unoccupied property insurance
This protects a landlord’s property when it stands empty longer than a standard policy would allow. Such protection is especially important when the property is left untouched for an extended period of time; this can lead to structural damage and/or theft, both of which are not covered by standard insurance policies after a certain amount of time has expired. A comprehensive unoccupied property insurance plan also covers the landlord’s expenses for vandalism, legal fees incurred during trespasser removal, and public liability insurance.
Landlord emergency insurance
Emergency cover provides the landlord with 24-hour, 365 days a year emergency assistance for a residential property. While policy specifics may vary between difference insurance providers, most emergency insurance covers issues such as sudden heating malfunctions, pest infestation, sewer complications, and leaks. Upon calling the claims line, a contractor will be sent to fix the property’s issues or to secure the area. Emergency insurance also covers labour, material, and call-out costs.
Alternative accommodation cover
This may overlap with landlord emergency insurance. Your tenancy agreement may potentially include the responsibility to re-house your tenants in the case the current unit is unsuitable to live in. Uninhabitable property must be caused by specified and insured events for relocation costs to be covered. Qualifying events may include subsidence, burst pipes, and structural damage caused by natural events. A tenant will be housed in reasonable accommodation, which will not impact his/her access to regular activities and is fit to accommodate the entirety of their family.
We hope you found this introduction to landlord insurance helpful. If you would like to speak with us about your property needs, contact us via our website to find out how we can help. We charge just 3% plus VAT (with a minimum fee of £948 plus VAT) for tenant-find services and 4% plus VAT monthly for full property management. If you're ready to get started, book your free valuation here.
If you are looking to expand your portfolio or reduce your financing costs, our free-to-use Finance Hub can help you to access dozens of competitively priced buy-to-let products tailored to your specific needs. Simply fill out a quick questionnaire and begin browsing the best products to help you achieve your investment goals.
Author: Julia KalutaBook valuation