Landlord’s insurance (also known as buy to let insurance or let property insurance) is something a landlord should consider when purchasing a property with the intention to let it.
If you fail to purchase landlord’s insurance, you are putting yourself at unnecessary financial risk, which could result in disastrous repercussions.
Here we discuss what landlord insurance covers, why it is so important, plus other considerations.
What is landlord insurance?
Buy to let insurance is a specialised type of insurance that covers the unique risks faced by landlords. While it shares some similarities with standard home insurance, it includes additional protection tailored to rental properties and tenants.
A standard home insurance policy will not cover you if you’re renting out your property, which makes landlord insurance a vital part of being a responsible property owner.
Why do you need landlord insurance?
While landlord insurance typically isn’t a legal requirement, if you have a mortgage on the property, then in most cases you will be legally obliged to ensure you have (at the very least) adequate landlords buildings insurance to protect both you and your mortgage provider’s financial interests in the property.
Even if let property insurance is not mandatory, it’s highly recommended for any landlord. Renting out a property comes with many potential risks—damage caused by tenants, legal liability for injuries that happen on the property, or loss of rental income due to unexpected events like a fire or flood.
What does landlord insurance cover?
Landlord insurance can be tailored to meet your specific needs, and policies often come with a variety of options. It is important to note that policy features, benefits, terms and conditions can vary, so the following should be used as a guide only:
- Buildings insurance
This covers the structure of your rental property, including the walls, roof, and permanent fixtures like kitchens and bathrooms. It typically protects against risks such as fire and floods. If your property is damaged by one of these insured risks, your insurer will cover the cost of repairs or even rebuilding the property (up to policy limits of course).
A note on rebuilds costs
When purchasing landlord insurance, you will need to insure it for the reinstatement or rebuild value. The most accurate way of doing this is to have to have a structural survey undertaken. The rebuild or reinstatement value for landlord insurance should typically take in to account the following aspects:
- clearing the site;
- surveyor costs;
- architect costs;
- complying with government and local authority requirements;
- miscellaneous fees.
The Royal Institute of Chartered Surveyors (RICS) also has a rebuilding cost calculator that is free to use.
- Contents insurance
If you rent out a furnished or partly furnished property, contents insurance can cover the cost of replacing furniture, appliances, or other items that belong to you as the landlord.
Note that tenant belongings are not covered under this policy—they will need their own tenants contents insurance for personal items.
- Landlord liability insurance
Property owner’s liability comes as standard with all our landlord insurance policies. This would cover you for example, when a tenant may hold you liable for an injury which was caused within / by your property.
Without this cover, if someone should make a claim against you for loss or injury, then if the case goes to court and your tenant is awarded compensation, you will need to find this money yourself. And with court sums running in to hundreds of thousands of pounds in some circumstances, this could see you in huge financial difficulty.
- Loss of rent insurance
If your property becomes uninhabitable due to damage from an insured event, such as a fire or flood, loss of rent insurance typically will cover the rental income you would have earned during the period that the property cannot be rented out.
Landlord insurance optional extras
There are also optional extras that some landlord insurance providers will offer for an additional cost, such as, but not limited to:
Legal protection insurance
Residential let legal expenses insurance typically covers the cost of legal fees that may arise from disputes with tenants, such as eviction proceedings or recovering rent arrears. With landlord-tenant disputes becoming more common, this can be a worthwhile addition to your policy.
Rent guarantee insurance
Rent guarantee insurance covers unpaid rent (up to pre-agreed limits) if a tenant defaults on their payments. While it’s not included in every policy and if often an add-on to legal protection insurance (see above), it’s may be a valuable option if you want to protect yourself from potential financial losses due to tenant non-payment.
How much does landlord insurance cost?
The cost of landlord insurance varies depending on several factors, including the value of your property, its location, and the level of cover you choose.
Properties in areas with higher crime rates or those prone to flooding may have higher premiums. Additionally, the type of tenants you rent to can impact the cost—renting to students or tenants on housing benefits, for example, might result in higher premiums as some insurers may view these as higher-risk groups.
Our cover
With Cover4LetProperty’s landlord insurance cover there are two options available for the buildings and contents. The first being landlord’s insurance standard buildings cover for a rented property.
The second is landlords buildings and landlords contents cover (the latter being required if perhaps your investment is part-furnished or there are communal areas).
Next steps
If you have any questions, please do not hesitate to contact us on 01702 606 301 – we will be very happy to help.
