What is Landlord Insurance?
If you are a landlord, you will already know how many things can go wrong when renting out your property. It’s important to make sure you have protection in place in case of any issues.
Landlord insurance is cover that will protect you from a variety of issues that arise during renting out your property. There are different policies you can choose but you can get coverage for building, contents, loss of rent, rent guarantee, liability and home emergency.
What is the difference between landlord insurance and household insurance?
Interestingly more than a third of landlords in the UK do not have the correct landlord insurance. This is usually down to landlords thinking that their home insurance will be enough when renting out a property.
Home insurance is great if you are living within the property but if you are renting to tenants, this leaves you thin on coverage. Some needs that home insurance doesn’t cover include; rent protection, liability & legal cover for tenants, and alternate accommodation when repairs are being carried out.
All three of those needs will be very pricey if not included within your insurance. Especially liability, rent guarantee and loss of rent. We will go into each of these policies further so you can find out more about what you need as a landlord.
Do I need Landlord Insurance?
Having landlord insurance isn’t a legal requirement in the UK and more specifically in our area; Brighton & Hove. Although, you shouldn’t rely on your general home insurance as this doesn’t cover rental property.
As stated above, this isn’t a legal requirement although you should consult with your lender on whether this is required within your mortgage agreement. It is likely that your lender may require you to have landlord insurance before letting out your property.
This isn’t a necessity but it’s highly recommended. It should be in your best interest to protect your property and finances. But you should not only have your own interests in mind, It is your responsibility to provide a safe and enjoyable stay for your tenants.
Landlord Insurance for different types of tenants
Student or HMO lets
It is not uncommon for insurers to refuse or include a high premium for insurance of a student let property. As is known, insurance is all about risk and due to the stereotype that students are more reckless and therefore more likely to do damage than a professional couple for example.
This leads to insurers providing a more specialist form of landlord insurance to suit the needs of renting to students.
An important type of insurance coverage you should consider if renting to students would be vacant properties insurance. This insurance policy covers your property during long periods of vacancy, such as the summer break from university. This will protect your property for up to 120 days during vacancy.
Just because you are renting to a family member, this doesn’t mean you should neglect landlord insurance. In fact, renting to family members can lead to uncomfortable situations when the tenant causes damage or cannot pay rent. We certainly advise you get landlord insurance even if you are renting to a family member.
DSS stands for the Department of Social Security. This refers to people who claim financial housing benefits due to financial difficulties caused by disabilities, unemployment or other factors.
Similarly with student lets, not all insurers will cover landlords who rent to DSS tenants. This although, should not put you off renting to a DSS tenant. There are specialist insurers who will insure you for this type of let. Insurance premium may be slightly higher but many landlords choose this option due to the high amount of possible tenants.
A professional let is seen as an individual, couple or family who pay their rent themselves. This type of rent is typically seen as the most reliable and therefore can lead to a regular landlord insurance.
This is typically a short term let specifically set out for a holiday period. The tenant will usually have a residence elsewhere but rent out a property to stay at whilst on holiday. This requires a specialist insurance so do consult with your insurance company about what to get.
Airbnb is a popular form of holiday let which has taken off in the past few years. In Brighton & Hove there are currently over 300 properties listed on Airbnb. Airbnb provides a host guarantee although stress that this should not be a replacement for landlord insurance. You should consult with your insurance company to find the best insurance policy to suit Airbnb.
Types of Landlord Insurance
Landlord Buildings Insurance
This form of cover as landlord insurance is the main coverage you will need as a landlord. Buildings insurance covers the bricks and mortar of your property or properties. This insurance allows you to have full protection even if you have to rebuild your property.
When applying for landlord buildings insurance it’s important to understand the rebuild/repair cost of your property in today's market. This will cover you up to whatever sum you insure which can protect from floods, fires or even accidental damage. We would advise you to insure your property for up to the maximum sum of a rebuild so you are not left vulnerable if anything were to happen.
If you are a lease-holder therefore sharing a building, it is likely that you will also be sharing buildings insurance with other lease-holders, such as a flat(s). In this case you should consult with your insurance company about what this covers so that you can make sure nothing is missed resulting in you having to pay the difference.
A useful cover to partner with buildings insurance would be home emergency insurance. If something essential such as the heating or electricity fails whilst renting to a tenant. You will need to get this fixed as soon as possible. With landlord home emergency insurance you are given a 24 hour helpline and usually no call out charge for any repairs that fall within an emergency issue.
Landlord Contents Insurance
This type of landlords insurance is especially for if you provide your property furnished or part-furnished. The majority of landlord insurance policies will include contents insurance, whereas you may have to choose it with other insurers.
A study carried out by simply business data in 2019 showed that only 35% of landlords ask for contents insurance. This shows how this type of insurance can be quite specialist unless your property is furnished or part furnished.
Contents insurance will cover sofas, TVs, carpets and much more. Interestingly it can often be slightly confusing to find the difference between buildings and contents insurance.
What is the difference between buildings and contents insurance?
The difference between buildings and contents insurance is that buildings insurance covers the physical structure of the property. Whereas contents insurance includes items that could be removed from the property.
The largest confusion comes when looking at kitchens and carpets as these by definition aren’t part of the structure of the property. Kitchen fittings are usually considered part of the contents insurance whereas wooden flooring could be considered buildings insurance. It’s important you check with your insurer before deciding whether you need contents insurance.
Loss of rent insurance
This form of landlord insurance provides you cover for if there were to be a crisis where the tenant would have to move out. This would result in a loss of rental income due to the tenants having to move out. Therefore this cover will allow you to claim for a loss of rental income due to a variety of types of situations.
This type of insurance shouldn’t be confused with rent guarantee (tenant default) insurance. Loss of rent insurance will not protect you if your tenant simply doesn't pay their rent. This type of insurance will also give mortgage lenders peace of mind as they have more confidence that mortgage payments will get made no matter the situation.
Rent Guarantee (Tenant Default) Insurance
Rent Guarantee insurance covers you monthly rental income if you tenants default. You should certainly consider this cover if you rely on your rental income for mortgage payments.
This landlord insurance covers if the tenant cannot pay their rent, if they deliberately cause damage, disputes over repairs. This coverage also includes legal fees if there are disputes which require legal action. There are certain requirements when taking out a rent guarantee insurance so make sure you consult with your insurance company.
Landlords Liability Insurance
Landlord liability insurance is a type of insurance policy that will protect you if anybody were to make injury or damage claims related to your property. This is a type of public liability insurance that can protect you from claims from tenants, guests or workers.
An example of this is if a tenant falls down the stairs due to a broken stair, they would be able to claim compensation for their injuries. Another example would be a tradesman having his tools stolen whilst working on your property.
This type of insurance is up to you. We strongly advise you to take up this type of insurance as accidents happen and it is best to be covered if they do. Landlords liability insurance usually comes included in a general landlord insurance package but it’s best you ask your insurer if you want this included.
How much landlord insurance do I need?
This question is not a straightforward one for us to answer. This largely depends on your own situation. Rebuild and repair costs will depend on how much buildings insurance, value of contents will depend on your contents insurance and many other factors.
We will always advise you to get the best cover to suit your situation so please do consult with your insurance company. If you do not have an insurance company or are unsure of what cover you require please contact us and we will happily put you in contact with an insurance broker who will give you advice and find the best deal for you.