Landlord Insurance for Rental Properties

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By Cai Bradley
Updated on Monday 16 August 2021

Set of keys for a house

Renting out properties has become a popular way of earning a passive income in recent times, with around 2.66 million landlords currently doing so in the UK according to research carried out by Hamptons International.

With hard-earned cash and countless hours of labour being invested in these properties, it is highly recommended that you take out the best landlord insurance policy to protect one of your biggest and most expensive assets.

Landlord insurance cover can be difficult to get your head around due to the long list of optional extras that can be added to each policy, such as tenant accidental damage or tenant default cover, but this simple guide will give you a clearer idea of the types of policies available, what they cover, how much they cost, and whether or not they’re worth it.

What is landlord insurance?

Landlord insurance is a type of home insurance policy that covers rental properties for landlords.

It usually contains a number of insurance options, depending on which provider you choose, and landlords are usually able to pick and choose the type of policy that best meets their needs and requirements.

Is landlord insurance a legal requirement?

No, there’s no law to say that you need a specific landlord insurance policy to rent out a property in the UK.

It is not a legal requirement, but it is widely recommended by most insurance experts, as the cover gives you vital protection against the costs associated with your property investment if things go wrong.

Despite not being required by law, it is not uncommon for mortgage lenders to make landlord insurance a requirement for those looking to take out a buy-to-let mortgage. Therefore, it may actually become a necessity depending on which lender you choose to take out a mortgage with.

What does a landlord insurance policy cover?

Landlord insurance usually provides cover for both the building itself and any furnishings that you’ve provided inside the property – in other words, it can be bought as a combined building and contents insurance policy if that’s what you want. You can also buy landlord insurance that covers just one or the other, but we always recommend getting the most extensive policy possible to fully protect yourself against all potential eventualities.

It can also come with rental income protection (in the event the tenant cannot work due to an illness or injury and they cannot pay the rent) and can cover you against any costs or liabilities if your tenants are injured at the property, but you may be required to pay an additional premium for added cover, depending on the provider and policy you choose.

The best landlord insurance policies will include:

  • Buildings insurance
  • Contents insurance
  • Fixtures and fittings insurance
  • Rental protection
  • Unoccupied property cover
  • Accidental damage protection
  • Property owners’ liability insurance

Some of these may be included in the cost of standard cover, while others may require an extra fee, but your provider should always make this clear before you commit to the policy and make your first payment.

Bear in mind that it’s also possible to take out standalone policies for any of the above if you wish.

Landlord buildings insurance

Landlord buildings insurance provides cover against damage caused to the structure of the building itself, including built-in features such as a fitted kitchen.

This type of cover will pay out if your property is damaged due to a fire, a flood or vandalism, which will cover the cost of repairing or rebuilding the property.

Remember, your policy will only pay out according to the terms and conditions (as with any type of insurance), and it’s important to be aware that making a claim on your policy is likely to increase your premiums when it comes to renewing your cover.

What does landlord contents insurance cover?

You can either have contents-only insurance, or you can choose to add it to your building insurance to get a more extensive level of cover - we highly recommend getting a combined policy. Landlord contents insurance will protect your own possessions in the rented property (such as the furniture) rather than the tenants’ (which they themselves are accountable for).

Landlords who are renting out flats should consider this insurance as it typically covers contents in communal areas, including stairways and landings.

If tenants wish to cover the cost of any damage to their own personal possessions, they should purchase their own tenants insurance policy - it is not the responsibility of the landlord to cover this.

Fixture and fittings insurance

This is a type of optional cover that can be added to your standard landlord insurance policy and is only for residential properties.

Fixture and fittings insurance protects you if any damage is sustained as a result of events such as a fire or flooding due to a burst pipe.

Replacing fixtures and fittings after damage can be really expensive, but with this cover in place, you’d be able to claim the money back so you won’t be out of pocket (subject to your policy’s terms and conditions).

Rent protection insurance for landlords

Rent protection cover (also known as rent guarantee insurance) protects landlords against the costs associated with any unforeseen rental income losses, should your tenants be unable to pay their rent - perhaps because they have become too ill or injured to work, for example.

While it’s important to remain sensitive and caring towards your tenants, the rent must still be paid, so you may feel that this type of added cover is essential when taking out a policy.

Read more: Rent Guarantee Insurance for Landlords

Insurance for an unoccupied property

Unoccupied house insurance is a useful policy that covers your rental property during any periods where there are no tenants living in your property. Bear in mind that ‘unoccupied’ usually means that no one has been living in the property for a period of over 30 days, rather than shorter timescales.

This policy is particularly worth adding to your landlord insurance package if you plan on renovating the property or are likely to have periods of transition between tenants, for example.

It’s worth noting that your standard landlord insurance policy will not pay out for anything such as theft or vandalism if your property is unoccupied for a while, so if you know there isn’t going to be anyone living there for a period of time, you should purchase this type of cover to protect you should anything happen.

Is accidental damage cover worth it?

Household mishaps are a common occurrence, so accidental damage insurance can be of great value to cover spillages, DIY slip-ups and any other unintentional breakages (as long as it’s covered under the policy’s terms and conditions).

Make sure you are aware of any exclusions in your policy as you weigh-up whether or not this type of cover is worth the premium you’re quoted and keep in mind that many things can invalidate your cover, so always check the small-print before committing to a policy.

Read more: What can void your home insurance policy?

Property owners’ liability cover (public liability)

If a tenant has an accident at your property and feels as though it is your fault as the landlord, they may try to take legal action against you. The expenses can be costly when it comes to liability claims, so property owners’ liability insurance is unquestionably worth consideration.

For example, rent in London costs an average of £1,615 per month, so investing in a good insurance policy for just a few pounds a month is a small price to pay for the sake of protecting such a significant source of income.

See our guide to home insurance terms for an explanation of any jargon that you may not be familiar with or read our complete guide to home insurance to understand how it all works.

Is standard home insurance enough?

Most general home insurance policies will not cover your rental property, especially if you’re not living there.

This is primarily down to the fact that problems can often arise in rental properties that would not occur in a home in which you are living. For example, tenants allowing maintenance issues (such as mould) to build up, or causing careless damage.

Landlords can also be held accountable if a tenant is injured while at their property, as mentioned when we discussed property owners’ liability insurance above. Ordinary home insurance is unlikely to cover you for any of these claims made against you or even claims you need to make against tenants.

Landlord insurance offers far more extensive and relevant cover, designed specifically with the needs of rental property owners in mind.

Multi property landlord insurance

If you rent out more than one property, you have two options as far as insurance goes:

1. Insure each property individually

This is the more common option, which allows you to compare policies and tailor them to suit each property.

2. Put multiple properties on one policy

This is a slightly more complex option, as many insurance providers might not be willing to offer you a multi-property deal for your situation. It’s available with some insurers, but there’s definitely less of a selection to choose from, which could result in higher premiums.

How much does landlord insurance cost in the UK?

The cost of landlord insurance has been estimated at around £120-£220 per year on average, depending on the provider and level of cover offered by the policy and chosen by you.

According to Bought by Many, the average cost of landlord cover is roughly £217 per year. Nimble Fins states that the average price for a ‘no frills’ policy is £170 and Compare the Market says that 20% of their customers paid an annual premium of £131.03.

As you can see, the cost varies massively and it is near-impossible to gauge an accurate estimation of how much landlord insurance will cost you without knowing your specific requirements, but the price generally depends on the size of the property and the policy you choose, plus any extras.

Rather than making your decision based on price alone, it is important to choose the policy that best suits your personal situation and needs. Why? Because although it may seem great to pay less premiums at the time, it could come back to haunt you should you be caught up in a legal battle without property owners’ liability insurance, or if you miss out on valuable income without rent insurance, for example.

Who pays building insurance - the landlord or tenant?

It is the responsibility of the landlord to arrange a buildings insurance policy, and while it is not a legal requirement, landlords must consider protecting both their tenants and their investments.

How to get the cheapest landlord insurance

One tip that might help lower the unavoidable cost of landlord insurance is tenant referencing.

This basically means getting to know your tenants and being able to tell the insurance companies what type of people will be living in your property.

Insurance providers may consider it a good risk management protocol, which should help you get more specific policy terms, and therefore, cheaper premiums.

Other tips include:

  • Make sure your property is kept in good condition
  • Make sure you have the right amount of cover (not more or less than you need)
  • Add security features to your property
  • Avoid accepting tenants that have pets
  • Avoid making claims for small issues (this will cost you more in the long-run)
  • Avoid leaving your property unoccupied as this is when it’s at a higher risk of theft and vandalism

Finding the best landlord insurance

Here is a quick list of what the best landlord insurance should cover:

The best landlord insurance usually covers all of the above, and will also offer you additional options should you require them.

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