A Beginners Guide to Landlord Insurance

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If you are a new landlord or considering being one, well done on your decision. Having a property to let is one reliable, steady stream of income— not to mention the benefits available from tax relief (Let’s wait and see what changes). Plus, it’s not just any other type of earning possibility. It gives you that good possibility of a passive income-earning opportunity. By this, it means that even while you sleep or literally sit down, your property has income coming in. If you’ve got a substantial number of properties being rented out, this can even mean a steady stream of income to the extent that you may be able to leave your day job.

However, there is the other side to being a landlord. You will be letting strangers into your property. Remember that you don’t know your tenants on a personal level. While generally, most tenants are good, this also doesn’t exempt you from the possibility of having tenants that can do you more harm than good – the income that you earn isn’t enough to compensate for the damage that they’ll cause to your property. Therefore, it is important to have some sort of insurance coverage to protect your assets.

Insurance covers for landlords may not be compulsory, but some mortgages do insist on seeing one before approving a buy-to-let mortgage (For more information, this useful article from BuyToLet.com gives insurance advice specifically for Buy-To-Let landlords). Personally, I would advise any landlord, especially a first-time one, to get a Landlord’s Insurance Policy before seeing potential tenants.

That said, for you to have insights on a private mortgage insurance guide, read through below to learn more about landlord insurance, that can be beneficial for you in this process..

What is Landlord’s Insurance?

Landlord’s Insurance is simply an insurance policy that covers the owner of a property from financial losses associated with rental properties. The policy protects the building and may include any contents inside that the landlord also chooses to cover.

landlord insurance

Why Do You Need Landlord’s Insurance?

Aside from the risks posed by tenants, there are natural circumstances that could occur such as flood situations, external fires, or accidents. You can’t afford to be caught exposed if these damages occur to your property.

Landlords have insurance products that have been specifically designed for them, and we will identify each type in this post. Don’t assume that your regular insurance covers damages to your rental property, because it is likely that it won’t. You could be forced to pay out of your pocket. There is a standard landlord’s insurance which will cover the basics, and there are also additional policies that you may choose to purchase. If you are unsure whether you need landlord insurance as a mandatory requirement, this article gives a helpful overview and can provide further information.

landlord insurance

What Are The Different Types of Landlord Insurance?

It is your responsibility, as a landlord, to get a buildings insurance on any property that you rent out. The buildings insurance protects the structure of the building itself. This includes the walls, the roof, and any other permanent pieces like an attached kitchen or bathroom and toilet set.

If there is a mortgage on your building, the bank or mortgagee will rightly insist that you insure your property before you get the loan. Nonetheless, even if there’s no mortgage on it, it is necessary that you cover it with an insurance policy or you will later regret if anything unfortunate happens.

A landlord’s building insurance covers the common range of risks that include storms, flood, fire, explosion and collapse. Some policies may also cover damage wreaked by spiteful tenants; this means if a tenant angrily breaks a window or smashes in the door, you could make claims for the cost of repairing it.

  • Property Owner’s Liability Insurance

This insurance covers the property owner for any damage from their building to another person or that person’s property. For example, you are still covered if a pipe comes off your roof and injures someone or smashes a vehicle windscreen below it.

Most policies are not tenant-specific and will insure first-time landlords for different types of tenants. Hence, it does not matter whether your tenant is a professor, a plumber, or someone on government benefits. However, there may be a clause if the property has been rented by asylum seekers. There should also be no problems as to the type of property being insured; a flat, duplex, privately-let or via an agency.

Along with property itself, this coverage also ensures that if one of your tenants or their visitors are injured while they’re in your property, the liability covers all the necessary expenses. You don’t have to shell these out of your pocket. Should your tenant decide to sue you, all the lawyer’s fees and medical expenses are also covered.

It is also important to inform your insurer about significant details of the property which you wish to insure, because hiding them could render your policy invalid in the event of damage. Invalid policies mean you fund the damages by yourself, which is your loss.

  • Insuring The Contents of Your Property

There are a lot of building insurers who offer a policy cover for the contents of properties belonging to first-time landlords. The maximum limit, though, is usually about £5000. The content cover is important even if your house is not furnished with main fixtures, but consider other furnishings such as the blinds and lighting. Could you afford replacing them if they were destroyed in a fire?

Now, if your property is well furnished, it would be advisable to take a policy that covers ‘separate contents’, or you could discuss with your insurer about increasing the limit so that it is equivalent to the higher value of your furniture.

Accidental damage is not often included in your insurance cover for contents destroyed as a result of accidents, even though it happens. However, you can still put it in your policy, and the extra cost might be worth the ease of mind you get knowing that it is covered. Hopefully, you will have pleasant and reliable tenants who take good care of your property and cause little damage to its contents, however… it is always best to prepare for the worst, so make sure you take some time to think about how you can protect yourself from the tenants from hell!

Rent guarantee insurance is in the case of an event that makes it difficult for you to collect your rent from a tenant. Some insurers offer this to first-time landlords and you could add it to your home insurance or purchase it as a separate policy.

A rent guarantee policy is very effective because about 33.3 per cent of landlords experience some trouble collecting rent from their tenants. The policy makes up for any losses you might incur from defaulting tenants. Though some insurers may give unlimited cover policies, there is usually a limit to the sum the policy will repay.

Rent guarantee insurance normally covers legal expenses insurance, so that you are sorted if the dispute with your renter ever gets to court. It can also cover cases with squatters. Legal expenses insurance has a limit to which it can cover for your legal fees but is very useful if needed.

Should your tenant be forced to transfer, due to perils, this rent guarantee also covers any possible loss of income that you may receive. This forms part of what guaranteed insurance is.

  • Landlord’s Home Emergency Cover

Emergency covers are mainly to cover the cost of arranging emergency repairs like a drainage flooding, gas leak, or rodent infestation at your property. It guarantees that qualified personnel will be on hand, 24 hours a day, 7 days a week, all year round, to resolve any such household emergencies, should they occur.

This policy usually covers call-out costs, labour and materials and is typically up to a limit of around £500.

Vacant Property

As a first-time landlord, you will experience intervals when your property will be uninhabited but you shouldn’t worry about that. It happens. There are available policies which you may purchase to protect your building and its contents during these times.

Buying Suitable Cover

As a first-time landlord, you should purchase the proper amount of buildings coverage, because purchasing too much could mean paying over the odds for your policy and too little could result in an insurance deficit. For instance, you could make a claim for £150,000, but the policy would pay an upper limit of £90,000 only.

A lot of people make the same mistake of insuring their building for the same amount as its market value, causing them to pay more than they should for their insurance policy. You should insure your property at its rebuild value, which is the amount it would cost if you were to build it from scratch. This often costs less than its market value.

Some buildings insurance policies offer alternative accommodation for your renters, if the property becomes too damaged to live in, such as if there was a fire situation. You could be allowed to make a claim for the reimbursement of rent money if your tenants are forced to move out suddenly as a result of an event like a flood. For a thorough overview of the various elements of landlord insurance, and how to go about securing your property’s cover, this article on Property Hawk is an excellent and useful resource for private landlords.

Lower Premiums for New Landlords

Landlords can reduce the cost of their insurance in different ways but it is imperative to note that low-priced policies aren’t always the best ones. You have already invested time and funds into your building, so it is appropriate to ensure that your protection is equally suitable in case there is a problem.

One of the easiest ways to save money is to evaluate different price ranges and choose the most suitable. Some insurers give concessions if you do not make any claim during the period which the policy lasts. Therefore, it might be worth paying for any small incidents from your own account to maintain your no claims discount.

You might also be eligible for a discount if you buy two or more policies from the same insurer or insure multiple properties with the same company.

Consider increasing the excess, which is the amount the policyholder pays for each claim made. Ensure that you can easily pay for any increased excess, otherwise, you could be in financial difficulty.

landlord insurance advice

Additional Tips

It may seem like a lot of insurance but don’t worry, not all of them are expensive. Plus, the benefits of having landlord insurance always outweigh the costs that come along with it. 

In several cases, the same insurer will give different types of cover, or bundle them together as a package into one policy which is often easier to buy.

There are also special offerings for first-time landlords so that they are not overwhelmed as they start managing their rented properties.

Mini-Guide: First-Time Landlord’s Insurance

To sum it up, here’s a quick guide for those of you that are first-timers in obtaining landlord’s insurance:

Remember to note the expiry dates for each insurance policy so that you don’t forget to renew them. If any damage occurs during a lag period, then you will have to bear the costs.

Finding an inexpensive insurance policy is one thing, but finding the appropriate policy for your properties and your personal needs can be quite hard. Meet up with other more experienced landlords so that they can help you avoid the mistakes they made and cover all the bases.

Final Word / Conclusion

While being a property owner or a landlord is a profitable business, it’s also one that’s not without a substantial amount of risks and stress. Remember, you entered that business to gain a profit. So, you must protect your rental assets at all times. 

If you don’t have one already, landlord insurance is something that you should definitely look into.

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Read more here:

5 Undeniable Reasons to Get Landlord Insurance

Is Landlord Insurance Tax Deductible?

Is Landlord Insurance a Legal Requirement?

The Benefits of Landlord Insurance

Landlord Insurance: What You Need To Know

Worrying New Figures For Landlords

Choosing the Right Landlord Insurance for You

Top Insurance Claims by Landlords Revealed

What is Rent Protection Insurance


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