Do I need specialist landlord insurance?

4 minutes

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There are many things to consider when you become a landlord.

How easy will it be to find tenants? Is your rent competitive? Is landlord contents insurance necessary? Before you put your property on the market, it’s essential you know what will make it a success.
Insurance may seem dry but it’s an important place to start. Not only does it ensure you’re doing everything right, but it will protect your assets too. While you want your tenants to stay safe and look after your property, this isn’t always the case. Accidental and intentional damage can always happen.

It may not be a legal requirement to take it out, but there are many benefits of landlord insurance that make it worthwhile and offer you greater peace of mind.

Here landlord insurance is explained, to help you understand how it differs from regular home and buildings insurance and why it should be considered.

Why do I need landlord insurance?

Standard home insurance policies aren’t designed for landlords. They don’t cover the various third-party risks that renting out your house, bungalow or flat can introduce. Even if you’re renting out to family members or are only renting out a room or two, it’s unlikely to cover all eventualities.

Third-party risks can be both deliberate and accidental, including damage caused by:

  • Vandalism or theft
  • Acts of nature (lightning, flood, storms etc.)
  • Tenants’ actions

Making a claim on home insurance  in your own name for a property that’s being rented out can be rejected by an insurer. This can leave you out of pocket and, in the worst-case scenario, unable to afford repairs to keep it in a safe condition. Many landlords fail to take out specialist insurance, leaving them vulnerable if they do need to claim.

Specialist landlord insurance can cover you against third-party risks and ensure you’re financially protected should anything happen to your rented property.

In some cases, when you’ve taken out a mortgage on a property that you plan to rent out, your lender will insist you have specialist landlord insurance in place. This will usually be required during the application but can be later.

What kind of insurance should a landlord have?

There are various differences between home and specialist landlord insurance policies. Both the main features of home and landlord insurance are explained to make the advantages of taking out a specialist policy clear.

What does standard home insurance cover?

Standard home insurance is vital to protect the property you live in. You’ll usually have the option of different levels of cover, each with its own benefits and limitations. 

Other features of standard home insurance include:

  • New replacements for stolen or severely damaged possessions
  • Home repairs due to floods, fire or natural disasters 
  • Lock replacement due to theft or loss of keys

What about specialist landlord insurance?

There are a few things you should look for when you compare landlord insurance and costs. As well as buildings and contents insurance included in standard home insurance, you need additional cover: 

  • Loss of rent/rent guarantee
    You’ll get compensated if your property becomes uninhabitable because of something you’re insured against (fire, flood etc.).
  • Property owners’ liability
    Tenants must have a home that is well maintained and safe. This covers you if a tenant injures themselves on your property and makes a claim against you (for example, tripping over an uneven step). 
  • Legal expenses
    The costs and risks of taking a tenant to court for unpaid rent or property damage are covered. Where their rent is your main source of income this is especially important. 
  • Alternative accommodation
    Covers the costs of arranging alternative accommodation for your tenants if it becomes uninhabitable due to an insured event. 

Compare landlord insurance

Specialist landlord insurance ensures you’re legally and financially protected against third-party risks that renting out a property introduces. As you normally don’t live in the property as a landlord, your visibility on maintenance and general upkeep is limited.

Relying on tenants to tell you about any issues can mean damage, either accidental or intentional, can be missed and won’t be covered by standard buildings and contents insurance.

Specialist landlord insurance is designed to protect against such risks. However, there are still differences between policies.

Compare landlord insurance costs and their level of cover to find the best, for example becoming a student landlord has different considerations, which may affect the type of insurance cover you need. The cheapest policy may not offer the amount of cover you’d require from a claim – especially if you own a large property.

By talking to your insurer and getting landlord insurance explained, you can decide whether it’s required in your situation.

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