What Landlord’s Insurance Do I Need?

You know all the ins and outs when it comes to letting properties. But you’re a landlord, not an insurance expert.  Working out what landlord’s insurance you need can be confusing.

What’s the difference between contents and buildings insurance, for example? Do you need both? What if you own several properties, can you insure these together on one policy? Or do you have to insure them separately? And are landlords legally required to have insurance?

Don’t worry, we’ve got it covered. Read on for answers to these questions and more.

Is landlord’s insurance a legal requirement?

While landlords’ insurance isn’t required by law, if your property is mortgaged, your mortgage lender may insist you have it. But it’s well worth having anyway. For one thing, your home insurance won’t cover you if you’re renting to tenants.

Dedicated landlord’s insurance gives you peace of mind – even between lets when the property is unoccupied. It protects the building, structure and fixtures and fittings from damage by fire, flood, storm or accident. Without it, would you be able to cover the cost of repairs or rebuild?

What does landlord’s insurance cover?

A standard policy typically includes:

• Property owners’ liability insurance
• Buildings insurance
• Contents insurance
• Loss of rent insurance.

There may be optional add-ons, too, such as:

• Accidental damage cover
• Legal Expenses cover
• Tenant damage cover.

Property owners’ liability insurance (POL)

In our experience, this insurance policy is the one that is most misunderstood by landlords. It’s basically public liability insurance tailored to landlords’ specific needs.

As a landlord, it’s down to you to make sure your rental property is adequately maintained and safe. But accidents happen. Whether it’s the postman slipping on a poorly seated paving slab in the drive, or one of your tenant’s guests tripping over a loose carpet, as the owner of the property, you’re liable for their injuries. And without the right insurance, you’ll have to find the cash to pay for medical bills and compensation.

You can see why this policy’s a must-have. But how much cover do you need?

Policy limits are usually set at £1m, £2m or £5m. While it’s hard to gauge the potential size of a claim, the more tenants you have in the property, the greater the risk of accidents happening. Make sure the limit you choose would be enough to cover the worst-case scenario.

Buildings insurance for landlords

What if a fire sweeps your tenanted property? Or high winds damage the roof, making a house uninhabitable? Buildings insurance takes care of the costs of repairing the damage right through to rebuilding.

Just be sure you estimate rebuilding at today’s prices when you take out your policy. If you don’t and you need to claim, you’ll have to pay the difference in the event of total loss. To help you work out the rebuild cost, use a calculator like the BCIS Public Rebuild Calculator.

According to our survey of UK landlords, tenant accidents were the third most expensive cause of damage to property. But when your relationship with a tenant breaks down, there’s always the risk of malicious damage. – like spray-painting your walls or slashing your sofa. Luckily, there’s cover available to protect you from the cost of this, [anchor link to tenant damage section below] although it doesn’t always come as standard. Make sure you ask if it’s included when buying your policy.

Landlord contents insurance

What’s the difference between buildings and contents insurance?

Imagine turning your building upside down. Everything that falls out, from furniture to fridges and lamps to rugs – is covered by a contents policy. Anything that stays put – like walls, floors, ceilings, toilets and baths -- is covered by buildings insurance.

Your tenants are responsible for their own contents insurance, but if you’re letting a property furnished, you’ll want contents cover too. Check the coverage levels on your policy before you buy it. Would you want replacement-as-new, for example? If so, you may want to increase the amount.

Rent protection insurance

If your tenants are forced to move out of your property temporarily – for example because of a fire or flood – you could lose out on rent. Loss of rent insurance protects your rental income if this happens. It can also cover additional expenses, like paying for alternative accommodation to house your tenants while your property’s being repaired. (Check your tenancy agreement, you’ll probably find you’re required to cover these costs.)

Most policies have a 12-month indemnity period (the length of time the insurer is responsible for compensating you for claims made). But you might want to think about extending it. Rebuilding a property from scratch could take more than a year, especially if it’s a listed building. On top of the construction, demolition and debris clearance take time, and so do architects’ plans. You should factor in wait times for specialist materials too. And check your tenancy agreement – it may specify a longer indemnity period, of 24 or even 36 months.

Rent protection vs rent guarantee: what’s the difference?

Loss of rent insurance is not the same as a rent guarantee. Loss of rent insurance covers rent you lose because your property is uninhabitable for a period.

Rent guarantees are often offered by agencies to cover rent losses incurred if a tenant doesn’t pay. That’s not covered by rent protection insurance.

There are steps you can take to avoid issues around rent payment, of course. Checking a prospective tenant’s rental history and declaring them to the local council so council tax bills are in their name, are sensible precautions. For more information see our landlord insurance.

Accidental damage cover

You may find accidental damage cover isn’t offered as standard on your landlord’s policy. Ask when you’re getting a quote because it’s useful cover to have. It protects you from the cost of accidental damage caused by you, it protects you from the cost of accidental damage caused by you, your tenant or third party guests. And extends to accidents that fall outside the category of an ‘insured peril’ like a storm, fire or flood.

Examples are:

• Putting your foot through the loft and damaging the ceiling of the floor below
• Hammering a nail through a water pipe and causing a leak or flood.

Legal Expenses Cover

There may be times when you need to pay for legal advice. You might be forced to take a tenant to court for non-payment of rent, for example. Or find yourself in court facing a claim made by a tenant. You won’t usually find Legal Expenses Cover as standard on landlord’s policies but it’s often available as an add-on. Talk to an advisor if in doubt.

Tenant Malicious Damage cover

This is for damage caused by your tenant intentionally, that isn’t covered by their deposit once their tenancy has ended. If you don’t have this cover, the repair costs could leave you seriously out of pocket. Check this is included in your policy when you get a quote. It’s often an add-on.

Multi-property landlord insurance

Do you rent out more than one premises? There are policies available for multi-property landlords like you.

Not only does a multi-property policy make managing your insurance easier (one renewal date, for starters) it typically costs you less than insuring your properties individually. In fact, with some insurers, the more properties you put on your policy, the better value for money you get. And you may find mixed-use properties are covered too.

Towergate landlords’ insurance

We cover a wide range of properties and types of tenants including multi-occupancy, students, local authority placements, and unoccupied. With excesses as low as £100, we can provide buildings and contents insurance to protect you from the cost of flooding, accidental damage, fire, malicious damage and more.

What’s more, if you insure multiple properties under one policy, you’ll save money on admin fees and earn discounts for every property you add.

 

You’ll find more information about the landlord insurance we offer on our website. If you’re ready to get a quote, you can get one online now. Or call us on 0330 173 3688. We’re here Mon-Thu 8.30 am to 5.30 pm and Fridays 8.30 am – 5.00 pm. We can compare prices from a range of leading insurers, so you get the policy that’s right for you.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a Fellow member of the Association of Accounting Technicians (AAT) and member of Association of Tax Technicians (ATT). She also has over 25 years' experience as a residential landlord.

This is a marketing article by Towergate Insurance. Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.