As a landlord, you take on a tremendous amount of responsibility. From maintenance and marketing to rent collection and tenant disputes, there’s always something to manage. That’s why many landlords choose a specialist agent to help lessen the load. One area that certainly shouldn’t be avoided is UK landlord insurance. Also known as buy-to-let insurance, this valuable cover protects landlords against the risks associated with letting property, such as:
- Loss of rent
- Accidental damage
- Fixtures & fittings
- Repairs & rebuilding
Policies vary in their levels of coverage, with many of the above features added to an insurance package that includes building insurance as standard.
What is landlord insurance?
Landlord insurance, or a buy-to-let insurance policy, is a form of cover that helps protect you from the risks associated with renting property. From missed rent payments to property damage, financial losses and additional expenses can be minimised with a sufficient landlord insurance policy in place. Typically, such policies automatically include buildings and contents insurance with add-ons such as rent protection and tenant default also available.
Do I need landlord insurance?
Landlord insurance is not a legal requirement, but it is highly recommended. If you require a buy-to-let mortgage to finance your property, you may find that the lender insists on valid landlord insurance.
It is also important for landlords to understand that home insurance and landlord insurance are not the same thing. A home insurance policy is only for owner-occupied properties and wouldn’t provide coverage for rental properties. Furthermore, if a home insurance policy is in place, there is no protection from loss of rental income.
How much does landlord insurance cost?
The cost of your landlord insurance policy varies depending on the type of property being covered, the tenants and the level of cover you choose. A simple policy just covering building and contents insurance, for example, will cost less than a policy including those forms of coverage plus tenant default insurance, property owners’ liability insurance and accidental damage cover.
It’s best to obtain several quotes before settling on a policy, as some may not offer sufficient protection for your needs or concerns.
What landlord insurance do I need?
Much depends on how much protection you want and the type of property you are letting. If, for example, you are renting out a fully furnished property, contents insurance is advisable. If you are concerned about potential damage, adding accidental damage cover may be a good idea, too. Ultimately, it depends on how far you want to protect your investment. Building insurance is often the base level for a buy-to-let insurance policy, with extra coverage added on if deemed necessary.
What are the different types of landlord insurance?
There are a variety of landlord insurance options. Each provides varying levels of cover to protect you against various costs and losses. These include:
- Landlord buildings insurance: Covers the cost of repairing or rebuilding the property if damaged by flood, fire or vandalism.
- Landlord contents insurance: Covers the costs of repairing or replacing your own items, but not the tenants’ items, such as furniture and appliances.
- Loss of rent insurance: An optional add-on that covers lost rent if your tenants have been forced out of the property due to an insured event such as flooding or fire. The criteria for this vary by insurer, so always check in advance.
- Tenant default insurance: If your tenants have failed to pay the rent and now have arrears, you can make a claim, as long as you hold this type of policy.
- Fixture & fittings insurance: An ideal option for landlords letting out a flat where the freeholder is responsible for buildings insurance.
- Accidental damage insurance: Covers costs from tenant accidents such as staining the carpet, smashing a window or messing up a DIY project. It should be noted that this is only for accidental damage, and if the property is vandalised, you will not be able to claim on this policy alone.
- Landlord liability insurance: Often included in a base policy as standard, this coverage helps to cover costs if a tenant injures themselves when living in your property due to your own negligence.
Many insurance providers will also offer further add-ons such as boiler breakdown cover and legal expenses cover.
Are tenant belongings covered by buy-to-let insurance?
No, and tenants must be aware of this. Your landlord’s contents insurance only covers the items you have furnished the property with. Items owned by the tenants require their own insurance policy.
How much landlord insurance would I need?
How much insurance you should have depends on the property and the scope of coverage. When looking for building insurance, you need to ensure that it covers the cost of completely rebuilding your property. It should include everything from labour to materials.
The contents insurance you choose should be sufficient to cover the cost of the items you provide to your tenants.
For the tenant default insurance, you’ll have rental income protected, but you’ll need a policy that sufficiently covers that loss. Many insurers have a cap on how much they are willing to pay out, so this, like with all other policies, requires research before committing to it.
What landlord insurance do I need if I own more than one property?
In many cases, you can add multiple properties to one policy. A multi-property insurance policy can help you to streamline things by having just one renewal date and one policy to pay for.
Do I need landlord insurance if renting to family members?
Landlord insurance is not a legal requirement, but it is recommended. This applies if you are letting your home out to family members, too. In the eyes of policymakers, letting agents and others, you remain a landlord, and your family members are tenants. Therefore, if the property were to be damaged or you were to miss out on rent, an insurance policy will still keep you protected.
While landlord insurance isn’t legally required, it offers valuable financial protection. With the right policy, you can avoid costly expenses and additional stress. Compare quotes and understand the coverage, and you can soon say goodbye to another landlord headache.
At Cairds, we provide comprehensive landlord services in Epsom and the surrounding areas. From preparing your property for letting to helping you find the right tenant, we help minimise property vacancy and maximise your rental income opportunities. And if you are looking for additional properties to add to your portfolio, we can help there, too. Contact us today to find out more.