Landlord insurance

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What is landlord insurance?

Landlord insurance is home insurance designed for rental properties, often combined with other insurance options for landlords. It includes one or more of:

  • buildings insurance
  • contents insurance
  • rental protection insurance
  • liability insurance – including property owners’ public liability or employers’ liability
  • unoccupied property cover

What does landlord insurance cover?

You can add different levels of cover to your policy, depending on what you want to be covered for. This includes:

  • theft, fire and flood
  • the structure of the building
  • built-in features, for example fitted kitchens and bathrooms
  • items such as furniture, carpets and curtains (this doesn’t include your tenants’ belongings)
  • your rental income – if you can’t rent the property due to damage
  • legal costs in case you’re taken to court
  • any vacant periods in between tenants
  • accidental damage by tenants
  • boiler breakdown
  • rent arrears

Bear in mind that the more cover you include, the higher the premium is likely to be for your policy.

Frequently asked questions

Is landlord insurance a legal requirement?

Landlord insurance isn’t a legal requirement, but if the worst happens, it can give you vital protection for your property investment. Many mortgage lenders make it a requirement of taking out a buy-to-let mortgage.

Can I be covered by ordinary home insurance?

Your home insurance may not cover a rented property if you’re not living there. That’s because there are issues with rental properties that aren’t likely to arise with the property you live in:

  • You won’t get to see the property often and judge the state it’s in
  • Tenants may not pay attention to maintenance issues like damp, which could get out of hand
  • Your tenants may cause careless or even malicious damage
  • You could be liable if a tenant is hurt while in your property

Regular home insurance isn’t designed for the specific issues that landlords might face. Your policy might not cover any claims you need to make, or claims made against you by tenants. 

What type of landlord insurance do I need?

It depends on a few factors. You can take a look at the options below to consider why you might need them.

  • Landlord buildings insurance. If you own the freehold of the property, buildings insurance is a good idea. It typically provides cover for loss or damage caused to the building itself and could provide a pay-out if your property is damaged due to fire or flood, for example.  
    Some buildings insurance covers malicious damage caused by tenants. 
  • Landlord contents insurance. Although tenants are responsible for insuring their personal belongings, if you’re renting out a furnished property, you might want contents insurance to cover the things you own. You could also add accidental damage cover to your landlord insurance, which would cover spills, breakages or damages caused by your tenants. If you’re renting out flats you could get contents cover for communal areas such as halls, receptions, stairs and landings. Many policies include this cover as standard and you can tailor its limit to your needs.
  • Rental income protection (also known as loss of rent insurance). If your building is seriously damaged, you probably won’t be able to rent it out, so you’ll lose all the rental income you were expecting. With the average UK monthly rent in excess of £900 per calendar month, rental protection insurance, also known as cover for loss of rent, can protect you. It’s important to properly assess the rebuilding period for your rental property before you take out the cover. You should read the lease carefully as it may also contain specific requirements for this.
  • Rent guarantee insurance (also known as tenant default insurance). This could provide cover for you if your tenants are unable to pay their rent.
  • Property owners liability (public liability) insurance. If one of your tenants has an accident at your property and considers it to be your fault, it’s possible they could decide to take legal action against you. Public liability insurance will cover you for your legal defence costs and expenses, as well as any damages that may be awarded. Liability claims can be very expensive, which is why many policies give you at least a £1 million limit of cover, for any one claim. You may wish to consider a higher indemnity limit, in case of court awards made in the most serious situations. Options of £2 million, £5 million or higher are available.
  • Employers’ liability insurance. This is a legal requirement if you employ anyone at your rental property, who is directly under your supervision and control. They might be a cleaner or gardener, or even a volunteer. You’ll be responsible by law for arranging employers’ liability insurance, to cover you for legal defence costs and any awards made for accidental bodily injury, illness or disease caused to staff because of your negligence.
  • Unoccupied property cover. This might be useful if you need to make renovations to the house or flat before you rent it, or if you are in-between tenants. Usually “unoccupied” means there’s no one living in the property for more than 30 days.

Because the extent and cover of commercial landlord insurance premiums vary, always compare landlord insurance policies to get a deal that’s right for you. 

How do I make a claim on my landlord insurance policy?

It’s important to refer to the details on your policy, to make sure you’ve got the right cover for what you need to claim for. If you’re a victim of a theft, you should report the crime to the police and get a crime reference number. After that, get straight in touch with your insurance provider.

Do I need contents insurance as a landlord?

If you rent your property as furnished, it’s a good idea to have landlord contents insurance. Furniture, carpets and curtains can be expensive to replace. Contents insurance could cover the cost if they’re damaged or destroyed – potentially saving you from a big payout.

Can I get insurance for multiple properties?

Yes. If you rent out multiple properties, you have a couple of options for landlord insurance:

  • Insure each property individually. You can compare policies that are tailored to suit each property.
  • Put multiple properties on one policy. This is a little more complicated, as the insurance provider may be willing to offer you a multi-property deal for your circumstances. We can’t help you compare policies and prices for this, but you can contact insurance providers directly for a quote.

Is landlord insurance tax deductible?

Yes, typically landlords can claim the expenses of running and maintaining their property, which includes the cost of landlord insurance, to reduce their tax bill.  Any expenses claimed for, should be incurred wholly and exclusively as a result of renting out the property. For example, for:

  • insurance
  • general property maintenance and repairs (not cosmetic improvements)
  • water rates, council tax, gas and electricity
  • costs of services such as gardeners and cleaners
  • letting agent fees and management fees
  • accountant fees
  • ground rents and service charges
  • costs of advertising for tenants etc.

The first £1,000 of your income from property rental that you personally own, is tax-free. This is your ‘property allowance’. To work out your profit – or loss - you need to:

  • add together all your rental income
  • add together all your allowable expenses which includes your landlord insurance
  • take the expenses away from the income

If your profit is £1,000 or less, you just need to make sure you have claimed for your property allowance in your tax code.

If your income from property rental is between £1,000 and £2,500 a year, you’ll need to contact HMRC to make sure you’re paying the right amount of tax and claiming the allowances you’re entitled to claim for.

You must report the income and the expenses you’re claiming on a Self-Assessment tax return, if it’s:

  • £2,500 to £9,999 after allowable expenses
  • £10,000 or more before allowable expenses

If you don’t usually send a tax return, you need to register by 5 October following the tax year in which you had rental income.

From 6 April 2020, the tax relief for residential landlords’ finance costs will be restricted to the basic rate of Income Tax.  

Do I need landlord insurance if I live in the property?

It depends whether the person you’re renting to is a lodger or a tenant. Someone is a tenant if there’s an agreement that you can’t enter their room without permission. In this case, standard home insurance won’t cover you and you’ll need to apply for specialist landlord insurance, specifying that you live in the property. 
A lodger is someone who lives in your home and shares living space with you. If this is the case, you can usually be covered by an extension to your standard home insurance.

See more on home insurance if you have a lodger

Is loss of rent covered?

Landlord insurance can cover loss of rent, but it’s not usually part of standard cover – typically you’ll need to add it to your policy. You may be covered if you can’t rent the property because of fire or flood damage, as long as that detail is included within your policy. If your tenants are unable to pay, you’ll need specialist add-ons. For example, tenant default insurance.

What do I need to get a quote?

When you start a landlord insurance quote with us, it’s a good idea to have some basic information to hand:

  • Your current insurance policy documents (if you have them)
  • Details about your property
  • Basic tenant information
  • The level of cover you need

We’ll ask you questions to make sure we have all the information we need, to provide you with a list of suitable quotes. 

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^^Correct as of October 2020

^^^On average it can take less than 6 minutes to complete a landlord quote through Compare the Market based on data in September 2020.

**For the period 1st June 2020 to 31st August 2020, 10,731 people responded to the recommend question. 10,011 responded with a score of 6 or above, therefore 93.3% are likely to recommend.

Emily Kindness

From the Business team  

What our expert says…

“The cost of landlord insurance varies depending on things like the size of the property and the type of cover you choose. You can help to reduce the cost of your insurance policy by demonstrating that you’re on top of risk management. For example, by having ample security measures in place and ensuring tenant referencing checks take place, when bringing in a new tenant.”