Landlord insurance is similar to home insurance, but it’s specifically designed to cover rental properties. If you’re planning on renting out a property, it’s important to understand the options available to you.
Standard home insurance policies aren’t designed to cover homes being rented, so a specialist landlord insurance policy can help ensure proper cover and protection in the event of a claim. Moreover, without a policy, you may be unable to secure a mortgage. Many lenders make having valid landlord insurance a mandatory condition of the loan.
Why Landlord Insurance Is Important
Landlord insurance can help protect you from financial loss resulting from the specific risks of owning a rental property. Although some risks are similar for all property owners (eg fire, flood and malicious damage), there are different risks for rental properties. For example, tenants could damage furnishings, regularly handed-down keys could threaten home security and tenants may default on rent payments. In the event that the property is uninhabitable due to a claim, then the loss of rental income can be covered. Fortunately, landlord insurance can be tailored to cover a wide range of risks.
Landlord Insurance Cover
Some insurance providers will offer extensive protection as part of a standard policy, while others will require you to “add on” extra elements to the main policy. Regardless, it’s worth considering the following types of landlord insurance cover:
- Buildings cover—This covers damage to the property resulting from fire, lightning, water, explosion or malicious damage.
- Property owner’s liability insurance—This cover protects landlords against compensation claims when the property causes injury or damage to tenants or visitors.
- Loss of rent – In the event that the property is uninhabitable due to a claim, then the loss of rental income can be covered
- Accidental damage insurance—This provides cover should a tenant accidentally damage the property, leaving the landlord with out-of-pocket expenses.
- Landlord contents insurance—This provides cover for the damage or theft of any fixtures, fittings or furnishings a landlord provides with the property. This may include carpets, white goods and furniture. Because items provided by tenants aren’t covered, this type of insurance may be of greater value in furnished lets.
- Cover for tenant default (rental protection) —This protects landlords if a tenant falls into arrears and—in some cases—during any void periods when the property is empty.
- Employer’s liability insurance—This offers protection from claims that result from employee accidents on the property. It’s a legal requirement for landlords to have employer’s liability insurance if anybody is paid to assist them in managing the property.
- Landlord’s legal protection—This may cover the costs of repossession and eviction proceedings should a tenant need to be evicted. Additionally, it offers protection against claims of negligence or injury.
Factors Affecting Cost
The amount you’ll pay for landlord insurance depends on a range of factors, including your claim history and the level of excess you choose. Additionally, other factors may influence your premium, including:
- Number of tenants
- Type of tenants (eg employed, student, house shares)
- Type of occupancy (eg residential, commercial or mixed-use)
- Property rebuild cost
- Property age and location
- Add-on cover (eg rental protection or home emergency cover)
Additional Considerations
Landlord insurance is usually taken out on a property-by-property basis. However, portfolio policies are available to landlords who own four or more rental properties and want to insure them all concurrently. Therefore, if you have multiple rentals, you might benefit from investigating portfolio policies before deciding which insurance cover is best at the most competitive premium.
Regardless, before taking out any policy, make sure it provides the right level of protection for your specific needs.
When renting out a property, a valid landlord insurance policy is often a condition of your mortgage offer from exchange, not completion. Nevertheless, taking out landlord insurance can be a wise move to help ensure the safety of your property and offer vital protection for your assets and earnings.
Fortunate enough to work in a Grade II property in the heart of the Cotswolds, John Morgan Partnership is in a unique position to understand not only the responsibility of owning such a property but also the requirements for insurance. We work closely with a select group of insurers who specialise in providing tailored cover for listed and historical buildings or Cotswolds homes, arranging home visits, and working closely with expert local surveyors to ensure you are adequately protected. When renting out a property, a valid landlord insurance policy is often a condition of your mortgage offer from exchange, not completion.
Our friendly team at JMP offer a holistic approach coupled with a truly personal service, setting us apart from the increasingly ‘faceless’ contact many now receive. Our understanding is that trust is everything and we aim to provide you with the peace of mind that you are in safe and reliable hands.
For more information on landlord insurance, contact us today.