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What you need to know: let property insurance quotes

If you need insurance cover for your buy to let property, how can you ensure that you get the most suitable cover for your own particular situation? Here we discuss some why landlords insurance is so important as well as considerations when getting your quotation.

Why may you need insurance for landlords?

If you have a let property with a mortgage, in most cases you will be legally obliged to have buildings insurance cover at the very least. This is to protect both you and your mortgage lender’s financial interests.

That said, you cannot buy any type of buildings insurance – it needs to be specific landlord insurance cover.

Don’t assume that you can make do with owner-occupier insurance home buildings and contents insurance cover (typically a bit cheaper than landlord insurance) because you can’t. As a landlord, the risks that you and your property face are very different to those for an owner-occupier.

Am I a landlord if I rent out a room in my home?

In any situation where you start obtaining rental income from your property, you have become a landlord;

  • that might apply even in what you may consider to be a relatively trivial situation, such as letting out a single room or two in your own house;
  • once you cross the threshold into a landlord’s activities, you may find that any existing buildings and contents cover you have on the property may become invalid, if it was designed for owner-occupier use;
  • as we mentioned above, typically, you cannot use an owner-occupier policy to protect your buildings or contents in a situation where you have tenants;
  • in some cases, the above might apply even if you are letting out a room on a very temporary basis during the holidays or university term etc. You might even find that this definition applies if you are letting out rooms to someone you consider to be a friend or relative – the governing factor may be whether or not they are paying you rent;
  • keep in mind that landlord insurance might not be your only consideration when making the transition from owner-occupier to a landlord. In some parts of the United Kingdom, you may also need to be formally registered with the local authorities;
  • once you take out landlords cover, you should find that you obtain a range of protection in addition to what you may have previously considered being normal in the context of owner-occupation. That is partly why a specific landlords insurance policy is required;
  • it is very important to remember that any landlord insurance policy might be put at risk if you fail to comply with the legal and regulatory framework governing the use of property for rental income;
  • examples of that might include things such as gas safety inspections, electrical inspections and the provision of appropriate safety equipment;
  • make sure that you discuss in advance with your landlord insurance provider any situation where you plan to use your property for multiple purposes in addition to letting. For example, running a small workshop on the ground floor, whilst letting to tenants above, may be an issue for your cover unless you have discussed it with your policy provider.

What does landlord insurance cover?

The only way to be sure that you really understand what your landlord insurance policy is providing you with by way of cover is to read it carefully.

Having said that, it might be possible to offer the following general categories of risk that you might expect to see provided under a typical landlord insurance cover policy.

Buildings insurance

Typically this can protect your property financially from the effects of damage from a number of insured events such as fire, floods, storms, earthquakes, vandalism etc.

You may wish to bear in mind that the level of buildings cover that you may need should reflect the total cost (including architects’ and surveyors’ fees, searches, site clearance and the like) of rebuilding your property, rather than the amount of your outstanding mortgage or the sum you bought the property for.

Contents insurance

Landlord contents insurance. As the name suggests, this area of protection covers your furniture, equipment and other moveable objects that constitute part of your property.

If you are letting property on an unfurnished basis, strictly speaking, you may not need this type of cover included on your policy. However, before deciding to dispense with it entirely, it might be sensible to ensure that, what you consider being fixtures and fittings (and hopefully therefore covered by your buildings policy) are also similarly seen as such by your insurance provider.

There may still be moveable items in the communal areas that may require insurance.

Third-party liability insurance

This is an important area. If a member of the public or one of your tenants suffers personal injury or damage to their property, which they consider to be attributable to some failing on your part to maintain your property in a safe condition, they may well sue you for damages.

You should be clear that if a court happens to agree with their interpretation of events, you may find staggeringly high sums awarded against you.

These are the circumstances that this type of cover seeks to protect you against, financially speaking.

Additional insurance covers

There may also be options to include additional elements to your business insurance policy – for example, cover for accidental damage, or loss of rent, or malicious damage caused by tenants. (The latter may be automatically included as standard in some landlord insurance policies).

What differences may there be between landlord insurance policies?

When getting property insurance quotes, remember that let property insurance policies may differ significantly in the level of cover that they provide and not just on price. Some of these features of cover may be more important to you than others – for example:

Subsidence

Some landlords are surprised to know that not all landlord insurance automatically includes cover for these major risks. At Cover4LetProperty, our policies do provide such cover.

Subsidence is a geological process that involves the ground falling away (technically called subsiding) underneath the foundations of a property. It might arise due to the ground simply collapsing away for unknown reasons, drought causing groundwater to disappear or old mining works etc.

The resulting damage can be catastrophic.

In passing, something called “heave” is the opposite, causing the ground to rise up and resulting in structural damage. The causes of that are equally as varied, though large-scale subterranean root intrusion is often a culprit.

Further reading: Subsidence – what causes it, and what about subsidence insurance?

Tenant restrictions

Even more surprising for some landlords, is the discovery that some policies don’t provide cover for all tenants (ours have no restrictions).

Some landlord insurance policies may exclude some elements of cover in situations where you’re letting to tenants such as students, housing benefit tenants or asylum seekers etc.

If those aren’t your target market segments then fine. But if you wish to let to whoever you wish, you will need to look for all tenant cover.

Loss of rental income

If your property becomes uninhabitable and your tenants have to move out then provided this was due to an insured event, you may find that some landlord insurance may offer loss of rent compensation as an optional feature of their cover.

Trace and access

A subtlety on some policies is that they don’t offer what’s referred to as “trace and access cover”.

What that means is that while the landlord insurance policy would typically cover the repair costs associated with, say a leaking water pipe and the damage arising from it, it may not cover any costs associated with finding the source of the problem in the first instance.

If you’ve ever experienced just how expensive work in tracing a fault sometimes is and then the even more costly work of restoring the damage caused by such investigations, you’ll understand just how important this cover – which our policies typically include as standard – might be.

Third-party liability insurance policy limits

The level provided may vary between insurers. Our policies provide £2m worth of this cover within your policy, with the option to increase to £5m.

Unoccupied property insurance

Landlord insurance quotes may also specify that you may need to take out additional cover if your property is to stand empty for a period typically in excess of 30-45 consecutive days. This period of time may vary between insurers.

Unoccupied property insurance is required is due to the extra risks that a property may face when it is not occupied. This could be from thieves, vandals or perhaps a small problem that, left unfixed, may turn into something more serious over time.

Read our Guide to Unoccupied Property.

What is the best insurance company for landlord insurance?

There is no one answer to this question. What you think is the best landlord building insurance company for you may be completely different from that of another investor. This is because:

  • your business insurance requirements may be completely different to that of another – for example, you may wish to insure a bungalow while another investor may be looking to insure a portfolio of properties;
  • as we have highlighted, not all landlord insurance policies are exactly the same. Not only do landlord insurance providers vary in terms of price and the service they offer, but the policy features and benefits may also be different too. That is why it is important to compare insurance policies on a like-for-like basis.

We can help

Using the services of a landlord insurance broker, such as ourselves here at Alan Blunden, means that you can access a wide range of insurance covers from a number of insurance companies – leaving you free to cherry-pick the cover that is most appropriate for you.

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