Beginners' guide to landlord insurance

Read our beginners' guide to landlord insurance, including discussion of buildings and contents cover, liability insurance, rent guarantee, emergency cover and more.

Key points

  • Standard home insurance is NOT suitable for landlords
  • Levels of cover vary widely between landlord insurance policies
  • Ensure you have the cover you need, but don't pay extra for things you don't require

Landlord insurance is a crucial consideration for anyone renting out their property.

Even with the most well-intentioned tenants things can go wrong and cost a significant sum to put right.

In the event of issues as diverse as accidental flooding and failed rent payments, the right cover can provide important peace of mind.

'Landlord insurance' is a broad term, and cover will vary from policy to policy.

Rather than being a single product, it's usually a combination of different insurances, tailored to fit the needs of individual landlords.

Comprehensive policies will cover most eventualities, while basic policies usually offer the opportunity to add on extra benefits. Landlords should consider the following elements of cover:

Landlord building insurance

Banks and building societies are likely to insist on building insurance as a condition of a mortgage - particularly a buy-to-let mortgage.

Even if you own your rented property outright, buildings insurance is likely to be the most basic and important sort of cover you'll want for such a valuable asset.Landlord insurance

The right buildings insurance will cover the cost of rebuilding or repairing your property following events such as:

  • Storm, floods, lightning or earthquakes
  • Subsidence
  • Damage to water, drainage or heating installations
  • Collision by vehicles, machinery or animals
  • Falling trees or branches
  • Vandalism or other malicious acts

Building insurance cover is sometimes unlimited - meaning you needn't estimate the cost of rebuilding your property - but other insurers will ask for a rebuild value.

This is not necessarily the same as the market value of the property, nor how much you bought it for. You may want to think about using the rebuild calculator supplied by the Building Cost Information Service (BCIS), commissioned by the Association of British Insurers.

Did you know...?

  • Loss of rent insurance is usually included under buildings cover
  • If your property is unfurnished, you'll still need to consider contents cover for white goods, carpets and curtains

Buildings insurance often covers malicious damage by tenants and, in some cases glass, lock and key replacement as standard, but you should check your policy to be sure.

Loss of rent insurance

Loss of rent insurance covers income lost if your property becomes uninhabitable and your tenants are forced to move out while another claim is honoured. This is usually included as part of your buildings cover.

Landlord contents insurance

The level of contents insurance you need is largely dependent on whether you're renting your property furnished or unfurnished, but it's important to think about in either case.

If your property is unfurnished, you'll still need to consider cover for white goods, carpets, curtains and blinds.

You should note that some building insurance policies include a level of contents insurance as standard to cover basic items such as carpets and white goods. This will typically be capped at a certain level, perhaps £5,000.How to be a landlord

If your rental property's furnished, you'll need to think about cover for furniture, electrical items, pictures and ornaments, too.

You needn't insure your tenants' possessions, though - that's their responsibility.

The amount you'll pay for landlord contents cover can vary depending on the location of the property and the type of tenant in it - cover for professional tenants tends to be cheaper to arrange than for students, for example.

Accidental damage insurance for landlords

Accidental damage is usually included as part of a building or contents insurance policy, but not always, so be sure to check. It should cover damage not caused by negligence, recklessness or misuse.

For example, spilling nail varnish on a carpet should be covered by an accidental damage clause in a contents insurance policy, whereas a foot through the ceiling while in the attic should be covered by a buildings insurance policy.

Landlord emergency cover

Landlord emergency cover could help in the event of a crisis such as a boiler breakdown, burst pipes or even simply lost keys - levels of cover that could prove particularly valuable if you're not employing a letting agency.

This type of cover could give your tenants round-the-clock access to a network of qualified tradespeople who will fix urgent problems without charge.

Some policies will cover the cost of alternative accommodation for your tenants if the problem makes the property inhabitable.

Landlord liability insurance

Landlord liability insurance could cover you in the event of the injury or death of any individuals on your property, and also protects you against litigious tenants who may try to sue you following an accident.

If you rent your property to students or individuals on housing benefit, the university or local authority may stipulate a minimum level of liability cover.Public liability insurance

You might also want to consider employers' liability insurance, which offers protection in the event of the death or injury of any person you employ on a casual basis at your property, such as a cleaner, handyman or gardener.

A good landlord policy should include liability insurance. If yours doesn't, you might want to think about taking out a stand-alone product.

Rent guarantee insurance

There's often a great deal of confusion surrounding rent guarantee insurance, which is regularly confused with loss of rent insurance.

Rent guarantee cover can offer compensation for the landlord if tenants default on their rent payments. Payments are typically capped at a certain amount and/or for an agreed period.

Legal expenses insurance

Legal expenses insurance is either purchased as an individual product or bundled together with rent guarantee insurance and is designed to cover the costs incurred by landlords taking legal action in court.

Did you know...?

  • Your insurer must be notified every time a tenancy change take place

Legal costs can, of course, be hugely expensive, and landlords may need help when it comes to dealing with issues such as disputes with tenants, evicting squatters, repossessing property and defence against any criminal action.

This type of policy can also be extended to cover the costs of recovering outstanding rent owed by tenants.

Unoccupied property insurance

Most insurance providers regard a property as being unoccupied if no-one has lived there for 30 consecutive days, at which point standard insurance becomes invalid.Unoccupied home insurance

After all, an empty property can be more of an insurance risk due to burglary, vandalism and weather-related damage.

If your property is going to be empty for an extended period - perhaps because of renovations or tenant changeover, for example - you'll probably need to arrange an additional, specialist unoccupied property insurance policy to make sure your property is still adequately covered.

Key landlord insurance points to remember

  • Landlords need insurance designed for landlords - a standard home policy is unlikely to be sufficient
  • Your insurer must be notified every time a tenancy change take place. If not, claims may be voided
  • Many insurers will offer discounts if you buy building and contents insurance together (or with any other 'add ons'), as well as special deals on insurance for multiple rental properties

By Rachel England