A landlord insurance policy – why bother?

Posted: 3rd Jun 2014

It is difficult to meaningfully compare an owner-occupier home buildings and contents insurance policy with a landlord insurance policy, as they cover different risks. Yet, as typically an owner-occupier policy may be of slightly lower cost, some landlords may be tempted to ask why they need specific cover.

Here’s why:

  • the risks you face as a landlord are simply different to those of an owner-occupier – for example, you have tenants and that may bring a range of risks and issues that typically will not apply to an owner-occupier;
  • your property is also a business concern, even if you also live in it yourself – that means that, in effect, you require a form of commercial insurance;
  • you are, as a result, asking the insurance provider to deal with an entirely different set of risk circumstances and they need to provide policies that will cover those risks for you;
  • it is, therefore, illogical to expect a landlord insurance policy to be broadly the same as an owner-occupier policy and sold at the same price;
  • note that the moment you rent out even a part of your existing home, any standard owner-occupier insurance you have in place typically becomes invalid – something well worth bearing in mind even if you rent out a room or two during the holiday season;
  • keep in mind also that if your property stands unoccupied for more than 30 consecutive days, then any standard landlords insurance or even owner-occupier home insurance may become invalid and you will need to consider unoccupied property insurance;
  • unoccupied property insurance (also known as vacant property insurance) is one area where the position for landlords and owner-occupiers may be identical, as a similar condition may apply in a standard owner-occupier policy;
  • if you are still tempted to try and make do with owner-occupier cover, remember that insurers have ways of checking the occupancy status of any property where an insurance claim has arisen – making a false declaration may not only lead to your claim being refused but you may find it difficult to obtain insurance in future (it may also, in some circumstances, be an offence);
  • so, it may pay to think carefully about a landlord insurance policy and to avoid dismissing it as unnecessary!