Landlord Insurance

Being a landlord can be very rewarding, but it does not, as in any other business, come without risks. There is the risk of issues with the property that is being let out, damage to the internals of the property by the tenant, breakdowns of appliances and furniture that form part of the tenancy and also the risk of void periods where there is no rental income. As such, it makes sense to have insurance, but everyday household buildings and contents insurance probably won’t cover everything that a landlord needs. In this guide we will walk you through specialist landlord insurance to help you unravel what sort of cover there is.

Is Landlord insurance a legal requirement?

As a unique insurance no, it isn’t a legal requirement. It is most likely that, if there is a mortgage on the rental property, the mortgage provider will require buildings insurance, but other than that, the let is at the landlord’s own risk and there is no legal obligation to have landlord insurance. It is worth remembering though, if a landlord does not have insurance, then they are personally liable to pay for any losses that occur during a tenancy.

The different landlord insurances available:

1. Landlord Liability cover: This cover is there to protect landlords against any compensation claims arising from injury or damage to a tenant or visitor to the property as a result of something going wrong with the property. This can be anything from a trip over an uneven paving slab to electrocution caused by faulty wiring. Having this cover will provide the landlord legal expenses cover and also cover the landlord for the costs of the claim.
2. Buildings insurance: The property is the investment and keeping it protected is vital. Any significant issues with the structure of the property or any damage caused by fire, flood or vandalism can cost quite a lot of money to repair if not insured.
3. Landlord contents insurance: This cover will protect any items that the landlord provides in the property as part of the tenancy, such as furniture and white goods against either theft or damage. When looking at this cover, also check for accidental damage insurance.
4. Loss of rent insurance: If the property becomes uninhabitable for whatever reason, the buildings insurance will cover the costs of any remedial work but will not cover the landlord for the lost rent while there is no tenant. This is not to be confused with rent default insurance or void period cover.
5. Tenant default cover: This will cover the landlord for rent not received should the tenant default on paying rent for two or more months. Levels of cover will change and might be subject to the landlord having carried out proper reference and credit checks.
6. Alternative accommodation insurance: Going on from the loss of rent insurance, if a property becomes uninhabitable for whatever reason and the tenant needs alternative temporary accommodation, the landlord could be liable to pay for that. This cover will protect the landlord against those costs.
7. Unoccupied property insurance: Landlords can lose significant sums during void periods between tenancies. Having this insured will prevent a landlord from losing out during these periods. The insurance policy should be checked, though, as there might be requirements around checking the property during void periods
8. Emergency insurance: In the event that there is an emergency with things like the heating, plumbing, drainage or power to the property, quick action is needed to get things back up and running again. Emergency call outs are not cheap so it could make sense to have some insurance cover.
9. Legal expense insurance: Although rare, there are occasions, when a landlord needs to take legal action in the course of the tenancy. Everyone knows that legal action is not cheap and it might make sense to take out legal expense cover.

As can be seen, a lot of aspects which are covered by a specific landlord insurance policy would not be covered under a normal home insurance policy. As a landlord you will need to decide what level of cover you need and you will need to check the insurance policy very carefully to ensure that the level of cover is right for your circumstances, but it certainly makes commercial sense to have specialist landlord insurance.