Do I need landlord insurance and building insurance?

Landlord insurance is a specific type of insurance, created to protect landlords from the risks associated with renting a property. A standard home insurance policy – buildings insurance, contents insurance, or a combination of the two – will most likely not cover tenanted properties, leaving you uninsured (and potentially breaking the terms of your mortgage) if you need to make a claim.

What is covered by landlord insurance?

A typical landlord insurance policy will cover building and contents – as a standard home insurance policy would – with additional landlord specific benefits. Your policy will be tailored to meet your needs, the below may be included as standard or an optional extra:

Buildings insurance covers the bricks and mortar of your property, providing protection in the event of a flood or fire. This tends to also include cover for your kitchen and bathroom. If your property is factored buildings insurance may be included in your factoring fee, this is worth checking before obtaining insurance quotes.

Contents insurance covers all of your possessions within the property – including furniture, carpets and window coverings – making it a requirement for furnished and unfurnished properties. Having adequate contents insurance will protect your items in the event of tenant theft or damage. Tenants are responsible for getting their own contents insurance to cover their possessions.

This is similar to a business having public liability insurance. Property owners liability insurance covers any costs incurred if someone suffers an injury following an accident linked to your ownership of the building. For example, if a tenant is injured when a tile falls from the roof, your property owners liability insurance should cover any damages awarded and associated costs.

As the name suggests, including accidental damage cover in your policy can protect your property and contents from one-off accidental damage caused by your tenant. For example, if your tenant created a large stain on an expensive carpet, having accidental damage cover in place could allow you to claim for repair or replacement. Malicious damage/ theft

Insuring against loss of rental income is particularly important if you have a large mortgage on your investment property and rely on the rent to cover the monthly payments. Having this insurance in place protects you if your property becomes uninhabitable for any reason. If, for example, your property floods and tenants have to move out to allow for the issue to be rectified, loss of rent insurance will allow you to claim back the money lost.

Finding the source of a leak can be an expensive and disruptive process. Including trace and access cover in your landlords' insurance policy can cover the cost of finding a leaking pipe, as well as repairing the damage caused.

Legal expense insurance can cover your legal costs in the event of a dispute occurring between you and your tenants. This cover can include the costs involved in repossessing your property.

Most standard home insurance policies do not include cover for when the property is vacant for longer than a specified period. Your rental property will most likely be vacant from time to time during void periods so it is important to ensure your property and it’s contents are adequately insured during these times.

Is it a legal requirement to have landlord insurance?

There is no legal requirement to have a specific landlord insurance policy, however, failing to have one in place will likely break the terms of your mortgage, in addition to invalidating your contents and building insurance. The first step when looking for landlord insurance would be to talk to your mortgage or loan provider to check what their stipulations are regarding renting the property.

Do I need landlord insurance if I am renting to my family?

Yes, landlord insurance is required if you are renting to a member of your family. You are classed as a landlord when you receive rent payments for your property, even if the rental agreement is informal, so landlord insurance is required.

What is the average cost of landlord insurance?

As with every type of insurance, the actual cost varies depending upon a number of factors, including:

  • Location of property
  • Type and size of property
  • Type of tenant (e.g. working professionals or students)
  • Level of cover required

Landlord insurance: students

Most landlord insurance policies will not include cover for student tenants as standard. Many insurance policies exclude all students – including mature and paid PhD students – who can make excellent tenants. It's worth adding student cover to your policy, even if students are not your obvious target market, so as not to limit your options when it comes to selecting tenants.

Landlord insurance: multiple properties

If you have a portfolio of buy to let properties it is worth investigating multi-property policies. A multi-property policy will most likely save you money, allowing you to have one central policy with the level of cover tailored to each individual property.

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