Landlord insurance, also known as buy-to-let insurance, is a form of home insurance, which can include contents cover and buildings insurance, and is specifically crafted for landlords renting out their properties. It offers protection against risks including property damage, legal liabilities, and loss of rent income.
This insurance provides landlords with financial backing to address claims and carry out repairs swiftly, ensuring minimal disruption in getting the property back to rentable condition.
You are not legally required to take out landlord insurance as a property owner. A standard home insurance policy including contents insurance or buildings insurance also may be invalid if you rent out your property to tenants.
Most lenders also require landlord insurance for a buy-to-let mortgage.
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You can tailor your Landlord insurance policy so it includes the right level of cover for you. This includes looking for cover for things like fixtures and fittings, as well as basic landlord buildings and contents cover.
With specialist landlord insurance, you’re covered for plenty of risks. Here’s what you’ll be insured against:
Disasters: such as storms, fires, and floods
Deliberate vandalism: by vandals or burglars, or in a riot
Burst pipes and boiler trouble: including escaped water or boiler breakdowns
Other issues: e.g. locks being replaced, lost keys, and alternative accommodation
There are a few things that aren’t generally included, such as:
General wear and tear or poor craftsmanship
Deliberate damage by your tenants
Your tenants’ possessions
Any damage caused by pets
Consider your property type when considering insurance:
Residential: Suitable for buy-to-let properties that you rent out.
Commercial: For properties used as business premises.
Multi-property: If you own multiple buy-to-let properties.
House in Multiple Occupation (HMO): Not usually covered by standard landlord insurance and typically require a specific type of insurance.
Selecting appropriate landlord insurance depends on your circumstances. Here's some key options to consider:
Rent guarantee insurance provides coverage for lost rent if tenants default on payments.
Unoccupied property insurance is useful during renovations before you rent out the property.
This type of building insurance protects the structure of your property against risks like fires or floods. If your property is within a block of flats, verify if the leaseholder's insurance covers this aspect.
Landlord contents insurance is for furnished rentals, offering coverage for your belongings. You can also opt for protection against accidental damage caused by tenants.
Offers assistance if property damage prevents you from renting out your space.
Landlord emergency cover provides immediate help for emergencies like burst pipes or boiler breakdowns for landlords.
Public liability insurance helps cover legal expenses if a tenant sustains injuries on your property and initiates legal action.
Employers’ liability insurance is mandatory if you employ anyone at your rental property.
There are some strategies to help lower the cost of your policy:
Enhance Security: Robust locks, burglar alarms, and CCTV can deter theft and insurers may view your property as a lower risk, reducing your premium.
Increase Excess: A higher excess (the amount you contribute for a claim) can decrease your premium. Ensure the excess amount is affordable for you.
Reduce Vacancy: Properties that remain unoccupied are considered higher risk by insurers. Keeping these periods brief can help cut down the price.
Bundle Policies: Combining insurance needs into one policy may be more cost-effective than purchasing separate policies.
Screen Tenants: Some tenants are deemed riskier by insurance providers, so choose your tenants with care.
The best landlord insurance policy isn't always the cheapest, make sure you have the right landlord home insurance cover in place for you.
As a landlord, it’s crucial you have the right cover in place to protect the properties you own. Yet, according to a recent survey*, two in five (41.4%) landlords don't have specialist landlord cover in place. This means that over one million landlords could be exposed to costly expenses, such as damage to property or legal disputes with tenants.
Buildings insurance is essential, but contents insurance is optional. However, we recommend taking out both as a landlord. Contents insurance is particularly important if you let out furnished properties. If anything in the property is lost, stolen, or damaged, a good policy will pay out for this.”
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Address, date of purchase, when it was built, and if it's commercial or residential
Employment status or any background checks
Select your level of cover as well as any optional extras, such as contents insurance
Basic details of your existing policy, including any previous claims history
Keep up to date and find out all you need to know with our latest guides.
A standard home insurance policy might not cover you if you rent your property to tenants and you aren’t living there. Tenants usually represent a greater risk to the property.
Tenants:
Aren’t invested in the property, so care less about its condition
May not notice maintenance issues
May cause malicious or accidental damage to the property
May hold you liable if they get hurt in the property
Landlord insurance, unlike home insurance, caters to these situations.
Insurers can offer adding multiple properties to your policy, and you may even be able to get a discount on your premiums as a result.
You may find that you need separate policies for each property, so it’s always better to compare your options before committing to a provider to get the best deal.
In the UK, subsidence coverage is commonly included in landlord policies. Subsidence, which involves the ground beneath a building sinking or collapsing, can cause serious structural damage to properties. Policies with subsidence coverage typically assist with the repair costs arising from such damage.
Subsidence cover is not a standard feature in all landlord insurance policies, and coverage details can differ among insurers and individual policies. There may be specific conditions or exclusions linked to subsidence, such as non-coverage for damage related to mining activities or a higher excess for subsidence-related claims.
You might need contents insurance as a landlord if you supply furniture, fixtures and fittings. A landlord contents policy can help with sofas and beds, floor coverings and electrical appliances. You can expect the following to be covered either as standard or with an add-on:
Furniture such as sofas and cabinets
Kitchen appliances like ovens or sinks
Curtains
Carpets
Paintings and pictures
Light fixtures
Outbuildings such as sheds or outhouses
Gardens and any contents in the garden
Communal areas, if you’re letting your property out to multiple tenants
You might also be able to claim for alternative accommodation for your tenants if any damage to your contents renders the property uninhabitable.
Landlords are generally able to claim a tax deduction for the running and maintenance costs of their property, which includes landlord insurance, as well as:
General maintenance and repairs
Council tax
Water, gas and electricity
Maintenance services like cleaners and gardeners
Letting agent fees
Property management fees
Accountant fees
The first £1,000 of your property rental income is your property allowance, and it’s tax free. Your total rental income added together, minus all your allowable expenses (including landlord insurance) will give you your profit or loss.
For profit margins of £1,000 or less, you just need to claim for your allowance.
For profits of between £1,000 and £2,500 you need to contact the HMRC to ensure you’re paying the correct tax (this can be done by calling 0300 200 3300)
For profits of between £2,500 and £9,999 after expenses, or £10,000 or more before expenses, you’ll need to report the income on a self-assessment tax return.
If you live in the property and you are renting a room out, you should clarify whether the agreement is that they are a tenant or a lodger. If you’ve agreed you cannot enter their room without their permission this would make them a tenant – and you’d need landlord insurance to be properly covered.
If they’re a lodger then you should be able to get an extension on your home insurance policy that will cover you for housing a lodger.
There are steps you can take to protect your rental income. One option is to consider rent guarantee insurance, which can provide coverage for periods when tenants fail to pay.
This type of insurance typically covers specific timeframes with an excess. Additionally, you may need to explore legal avenues, such as eviction proceedings, to address non-payment issues. It's essential to review your options and seek legal advice to navigate such situations effectively.
Loss of rent cover protects you if your tenants have to move out due to an event like a flood or fire. It covers your lost rental income and the costs of finding tenants a new place to stay.
Legal expenses aren't usually covered with standard landlord insurance. This cover is offered as an optional extra to your policy for additional cost. It covers you for any legal fees related to your property. This can include contract disputes and debt recovery.
To make a claim on your landlord insurance, you typically need to follow the process outlined in your policy documents. This often involves filling out a claims form provided by your insurer and submitting it along with any required documentation. You may be able to submit your claim online, by mail, or over the phone, depending on your insurer's procedures. If you're unsure about the process, you can contact your insurer directly for guidance on how to proceed with your claim.
Boiler cover isn't mandatory for landlords, but it can be beneficial. Having boiler cover can help ensure that your property remains habitable for tenants and can help avoid potential headaches if the boiler breaks down.
Typically, the landlord will pay for buildings insurance. Landlords are responsible for insuring the structure of the property, while tenants are usually responsible for insuring their own possessions with contents insurance. However, it's essential for landlords to review their lease agreements and insurance policies to understand their specific obligations and coverage.
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