Landlords Insurance

What is Landlords’ Insurance?

The insurance requirements of a landlord are quite different from those of an ordinary residential home-owner; a landlord requires protection not only for his, or her, property – that is, the bricks and mortar – and its contents against fire, flood, theft, etc, but also against any circumstances that lead to the loss of the property as a source of income, or claims against the landlord by a tenant, workman or a member of the general public.

The level of landlord insurance cover provided varies from broker to broker, as do the premiums charged, but the fact remains that almost 40% of the properties in the UK are insufficiently insured, so it is important that a landlord insurance policy includes all the necessary elements.

Landlord Insurance Features & Benefits

Landlord insurance, per se, is not a legal requirement, but, given the risks facing a landlord every day, it would be foolhardy – indeed, potentially ruinous – to proceed without it. A “standard” landlord insurance policy will include a buildings element, to cover the cost of rebuilding the property completely in the event of fire, subsidence or some other calamity; this element is likely to be index linked, so that it reflects rising costs, year by year, but does depend on the original valuation of the property – otherwise known as the “Building Sum Insured” – being accurate, in the first instance.

Contents cover – for possessions, furniture and fittings belonging to the landlord, but not to tenants – may also be included, if need be.

Above and beyond these basic provisions, however, a landlord is also likely to require Public Liability Cover, Employers’ Liability Cover, and protection against loss of rent, caused by a tenant withholding rent, absconding, etc. These additional extras mean that a landlord is protected against claims from members of the general public, or any workman – effectively an “employee” – working on the interior, or exterior of the property, in the event of injury, and covered for legal fees, should legal action against a tenant be necessary. It may also be possible to obtain compensation from a landlord insurance provider for lost rent.

The premium that you are required to pay for landlord insurance depends, of course, on the precise details of the cover, but is also affected by the Buildings Sum Insured, the age, location and type of property, the type of tenants, etc.. You should also be aware of some common pitfalls, which may, in fact, completely invalidate any insurance policy that you may have. You should not, for example, let out a property without the explicit consent of your mortgage lender; this should not, of course, be a problem with a buy to let mortgage, but a standard, residential mortgage is altogether different. In any case, you should also check the small print of any landlord insurance policy for any clause(s) that expressly forbid letting to students, DSS claimants, and other tenants considered to present high risk, in the eyes of an insurance provider.

The premiums and excess values of some landlord insurance policies are calculated on the basis of a property being let to professional, working people, so letting to other types of occupant may invalidate the policy, or require recalculation of the premium payable.

Many landlord insurance providers conveniently – in theory, at least – “bundle” together all the required elements of landlord insurance together in a single package, available at a reduced premium, when compared with individual insurance products. This can, of course, be a boon for the busy private landlord, but it also makes it all the more important to determine that you have exactly the cover you want. Reduced premiums are certainly desirable, but less so if you discover, when you make a claim, that say, subsidence, or accidental damage, is not covered by a policy.

Thankfully, nowadays with the phenomenal growth of the buy to let sector in the last decade or so, the market for landlord insurance is booming, and competition is fierce. This means that a large number of attractive insurance products available on the high street, and on the Internet – insurance comparison sites, for example, can allow you to examine multiple offerings from various providers, in minutes – so there should be no difficulty in finding the right landlord insurance policy for you, and your property.