Landlord insurance

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

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:

1. you won’t get to see the property often and judge the state it’s in
2. tenants may not pay attention to maintenance issues like damp, and may let them get out of hand
3. your tenants may cause careless or even malicious damage
4. you could be liable if a tenant is hurt while in your property

As you can see, regular home insurance isn’t designed for the specific issues that landlords might face, and your policy might not cover any claims you need to make – or claims made against you by tenants.

It depends on a few factors. Let’s take a look at the options and see why you might need them.

• Landlord buildings insurance. If you own the freehold of the property buildings insurance is a good idea, landlord or not. 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 protection 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 at £918 per 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 make specific requirements for this.  
• Property owners liability (public liability) insurance. If one of your tenants has an accident at your property and considers it’s your fault, they might 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, so many policies will give you at least a £1 million limit of cover for any one claim. You might like 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. This might be a cleaner or gardener or even a volunteer. You will 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 due to your negligence.
• Unoccupied property cover – which 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 there for over 30 days.

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

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

1. Insure each property individually. This lets you compare policies that are tailored to suit each property.
2. 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.

Costs vary based on things like the size of the property and the type of cover you choose.

Do I need any information from my tenants?

The more information you have, the better. This doesn’t give you the right to be nosey, but knowing who your tenants are and what they do could work to your advantage and give you comfort that they can pay the rent. Insurance providers may see tenant referencing as a demonstration of good risk management, which could help you get more tailored policy terms.

Cheap landlord insurance isn’t always the best solution – it’s about getting the right cover for your needs. That’s why we’ve made it easy to compare landlord insurance at Compare the Market – just tell us what you need and we’ll do the searching for you. Then you can compare prices and choose the landlord insurance quote that suits you.

Get a landlord insurance quote that suits you.