Do I need landlord insurance?

A common question we get from landlords is, do I need landlord insurance? The simple answer is yes! Some landlord insurance is compulsory if you want a buy-to-let mortgage, whereas other options are simply advisable.

Unfortunately, there is always the possibility of something going wrong and a landlord being left out of pocket. This includes:

• Non payment of rent (In the event of an insured peril/claim)
• Tenant damage to your property
• Damage to your property from water, fire, weather etc
• Accidents in your property causing injury
• Loss of rental income/rehousing alternative accommodation costs if the tenants have to move out (after an insured event)

Here we take a look at four different ways that landlords can protect themselves with the right insurance products, ensuring ultimate piece of mind.

Four types of landlord insurance

1) Buildings insurance
Buildings insurance is widely considered to be the most important type of cover and a priority for all landlords. Mortgage lenders are likely to insist on a landlord holding a policy – and even those without a mortgage are advised to cover themselves.

A good policy will cover the cost of rebuilding or repairing a property should it be affected by issues such as storms, floods, vandalism, fire, damage to water or heating systems, subsidence, falling trees and much more.

Your policy will also cover loss of rent, but only in the case of an insured peril (in the event of a claim), such as a fire or flood.

Buildings insurance will, in many cases, cover malicious damage by tenants, providing a further benefit to landlords.

2) Contents insurance
Contents insurance is just as important as buildings insurance, particularly if a property is let fully or part-furnished. This insurance protects all contents – such as furniture, sofas, televisions, carpets and other possessions – against theft or damage.

One tip is to ensure a policy offers a ‘new for old’ term, meaning landlords can replace existing items that are damaged or stolen with brand new versions. Landlords do not need to insure their tenant’s belongings, so should only purchase cover for their own items.

3) Landlord liability insurance
This part of the policy covers landlords in the event of somebody being injured or killed while on their property. It also protects landlords against any tenant who opts to sue following an accident. Those who let to students may find this type of cover is a requirement of their university, while local authorities often stipulate a minimum level when letting to applicants on housing benefit.

Landlord liability insurance is sometimes offered as part of another landlord policy, but if it is not, it is well worth taking out.

4) Rent guarantee
Even tenants who tick every box during the application stage can go on to default on their rent. A change of circumstances – such as the loss of a job – is sometimes all it takes. But landlords with a rent guarantee plan in place – which many lettings agents provide – will still receive their monthly payments, typically up to a maximum amount for an agreed period.

Do I need landlord insurance if I’m letting to relatives?

You may think if you’re letting to relatives that this is “safer” than letting to tenants you don’t know, and therefore insurance may not be required. However your standard home insurance will not cover your relatives if you’re not living there yourself. This means it is highly advisable to have buildings and contents insurance, and a written tenancy agreement in place, even if they are family!

If I’m getting landlord insurance, what could affect my premiums?

For all landlord insurance products, there are several things that could affect the cost and push up the premium. These include:

• Location of the property – a high risk of flooding or subsidence as well as a higher crime rate in the area
• Type of property – listed buildings, older buildings, and those in a conservation area
• Type of tenant – houses of multiple occupation (HMOs) and tenants that receive housing benefit are deemed higher risk
• Insure for the rebuild valuation of your property (not the market valuation)

We offer a wide range of specialist landlord insurance products. To find out more or get a quote, visit our dedicated Landlord Insurance page.