What type of landlord insurance do I need?
Choosing landlord insurance can be overwhelming and confusing. With so many options and features available, it can be difficult to know what’s best for your needs. At Alan Boswell Group, we offer comprehensive solutions that provide you and your tenants with peace of mind – here’s what to consider.
By Alan Boswell Group
What is landlords insurance?
Landlords insurance is a type of policy that specifically covers rented properties and are designed to protect landlords from financial loss. Policies cover a wide range of insured events (or perils as they’re sometimes called).The specific events you’re covered for will depend on the policy you choose but could include:
Structural damage to the property.
Malicious damage.
Loss of rent.
Damage to contents that you provide.
What are the different types of landlord insurance?
There are a number of different options to suit the type of property and tenancy you have. In the majority of cases, policies will bundle together two or three core features which you can then add to. Types of landlord insurance that you can choose from, include:
Buildings insurance
This covers any damage done to the structure of your property, as well as any permanent fixtures and fittings such as drains, plumbing and heating systems.
Policies typically cover damage caused by fire, flood, storms and fallen trees, as well as subsidence and vandalism.
Contents insurance
This covers the cost of repairing or replacing items you provide. This can include furniture, kitchen equipment, carpets, and curtains – in other words, anything that can be removed if the property was sold.
As a landlord, you only need to cover contents that come with the property as tenants are responsible for insuring their own belongings.
Public liability insurance
Also known as landlords liability, this covers legal fees and compensation costs if someone has an accident in your property and takes you to court. For example, if a tenant or their guest trips on a loose step and breaks their arm.
Employers’ liability insurance
You’ll need this by law if you employ any staff – for instance, a cleaner, gardener or housekeeper, even if they only work part-time. Employers’ liability compensates employees if they become ill or are injured while working for you.
If you’re caught without employers liability you can be fined for every day you’ve been without cover.
Loss of rent protection
Also known as loss of rent protection, this compensates you if you can’t rent out your property because of an insured event. For example, if repairs are being carried out because of a flood.
Rent insurance
If your tenant defaults, rental insurance means you can claim for non-payment of rent.
Bear in mind that loss of rent and rent protection are often (and easily) mixed up so double check you have the cover you need.
Legal expenses insurance
Pays for professional legal advice if you need to defend yourself in court or want to pursue a claim against someone else.
Legal expenses insurance can vary but features could include 24-hour access to a legal helpline, tax investigation cover, and support with evictions.
Malicious damage insurance
Covers the cost of any damage caused intentionally by anyone with a legal right to be on the property – such as tenants and their guests.
Damage caused by anonymous third parties is classed as vandalism and should be covered by your buildings insurance.
Alternative accommodation insurance
Pays accommodation fees if you need to temporarily re-home tenants because of an insured event such as a fire or flood. You’re only likely to need this if your tenancy agreement says that you’ll provide alternative accommodation.
Accidental damage insurance
This covers unintentional damage, for instance if someone hammered a nail into a water pipe or spilt red wine on a carpet.
What’s included in accidental damage cover can vary widely and some policies will also cover external damage like broken windows.
Unoccupied property insurance
This covers your rental property if it’s empty for long periods of time, for example if you’re in-between tenants or refurbishing.
It can be an important feature worth considering as most standard landlords insurance policies only cover unoccupied properties for up to around 30 days.
What other insurance do you need as a landlord?
Policies can also include a range of other features that aim to help you manage your property effectively, such as:
Emergency home insurance – covers household emergencies like burst pipes, plumbing and drainage issues and broken-down boilers.
Track and trace – locates the source of leaking water which can help you resolve issues quickly and help prevent recurring problems.
Key care – covers the cost of replacing lost or stolen keys.
What level of cover do I need?
Level of cover simply describes the amount of money you’ll be compensated with if you make a claim.
In some instances, the level of cover is fixed, and you’ll only be compensated up to a limit set by the insurer. If you feel you need more cover than the insurer is offering, you can of course ask for an increase, but this is likely to raise your premium.
In other cases, the level of cover is based on your own specific needs and you’ll have to agree an appropriate figure with your insurer, for example:
Buildings insurance – the sum insured (level of cover) should be enough to rebuild your rental property if it were completely destroyed. If you’ve recently bought a property, you can find out what this is in your valuation or Home Buyer report. Alternatively, you can hire a surveyor to determine this or use the rebuild calculator from the Association of British Insurers (ABI).
Contents insurance – remember, you’ll only need this for the items you include as part of the rental agreement but it’s important not to underestimate what that amount might be. Even if you lease an unfurnished property, consider the cost of replacing carpets, underlay, blinds and curtains.
Single item limit – this is the maximum amount you’ll get for any one item and is usually a standard feature if you have contents insurance. Whatever the limit is, it’s a good idea to check it’s enough to cover the most expensive item you provide.
What conditions or exclusions do I need to know about?
An exclusion is an event not covered by your policy. Almost all types of insurance come with exclusions and conditions which you’ll need to follow. Not following the terms and conditions can invalidate your policy which means you won’t be compensated if you make a claim.
The most common conditions and exclusions include:
Wear and tear – landlords insurance won’t cover the cost if something breaks down because of age, for example if an old boiler stops working.
Negligence – policies are unlikely to cover you if a claim is a result of carelessness, for instance if thieves entered through an unlocked door.
Maintenance – insurers expect properties to be cared for so you might find some are unwilling to compensate you if gutters are damaged because they haven’t been regularly cleaned.
Do I need landlords insurance by law?
In short, no – landlords insurance is not something you must have by law. The only element of landlord cover you may legally need, is employers’ liability.
However, if you have a buy-to-let mortgage, your lender could also insist that you have buildings insurance – it could even be a condition of the loan.
Despite the fact landlord insurance isn’t a legal obligation, it is strongly recommended. Not having a policy means covering costs yourself which could set you back thousands of pounds.
Do I need buildings insurance if I’m a leaseholder landlord?
If you’re the leaseholder of a flat within a larger block, the freeholder should be responsible for buildings insurance but it’s important to check your contract to confirm this is the case.
If you joint own the freehold with other leaseholders, all of you are responsible for buildings insurance.
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Do tenants need buildings insurance?
As the landlord, it’s your responsibility to organise buildings insurance and not the tenant. Tenants only need to insure their own belongings.
Can tenants insure a landlord’s building?
In general, no, if you own the freehold of a property, the building itself is your asset to protect.
If you’re a tenant in the sense you’re a landlord with a leasehold and someone else owns the freehold to your property, you may be responsible for buildings insurance. If you are, this should be clear within your condition of ownership documents so it could be worth double checking.
Can I insure more than one property on the same policy?
Yes, most insurers offer landlords portfolio insurance which lets you cover a number of properties on a single policy. One of the benefits of doing this, is that you minimise admin and only have one insurer to deal with.
Portfolio insurance can also work out cheaper than individual policies as you’ll often be given a discount for each property you add.
I own a block of flats, what type of landlord insurance do I need?
The type of landlord insurance you’ll need will depend on whether you own the freehold or leasehold of the building.
If you’re the freeholder (or a management company) you can arrange a specialist policy known as block insurance which typically includes buildings insurance. If you provide facilities such as post lockers or if you’ve carpeted communal areas, you may also want to consider a policy that includes contents cover.
Can I get landlord insurance for an HMO?
If you rent out a house in multiple occupation (HMO) you’ll need specific HMO landlords insurance. This is because standard landlord policies are unlikely to give you the cover you need for the risks you face when your property is home to more than one household.
What type of landlord insurance do I need for short-term lets?
Landlords insurance is extremely flexible, so you’ll be able to tailor policies to suit your needs no matter what type of let you have.
Whether you rent out a holiday home, or advertise on platforms like Airbnb, it’s important to look for insurance that covers the risks you face when you have a high turnover of guests. Other types of landlord insurance that are available include:
Landlord insurance that suits you
At Alan Boswell, we understand just how important it is to find landlords insurance that you can rely on. We also recognise there’s no such thing as one size fits all which is why we spend the time to really get to grips with your landlord needs.
Not only do we offer five-star rated insurance, we’re also an award-winning leading provider. To find out more about the products and services we provide, you can contact us using our enquiry form or start a quote online. Alternatively, you can speak to an expert on 01603 216399.
Read more: What is an insurance broker? All your questions answered.