Home insurance for landlords
Renting out a property can be lucrative, but it also comes with a range of financial and legal risks. Standard buildings' insurance and content insurance policies won’t be sufficient to cover these and are typically invalidated when a property provides rental income and is being let out on a long-term basis.
If you’re one of the two million Britons renting out a residential property, you’ll need landlord insurance for it. This is called landlord insurance or buy to let insurance. These policies provide protection against the damage, theft or loss of the structure and contents of your rental property, as well as against other liabilities faced by landlords. Landlord insurance is tax deductible, which means it is classed as an allowable expense that can be deducted from the rental income achieved from the property.
In This Guide:
- What does landlord insurance cover?
- What additional cover can you get on a landlord insurance policy?
- Who is landlord insurance for?
- How to Save Money on Landlord Insurance
- How do you compare landlord insurance quotes?
What does landlord insurance cover?
If you have a property to rent, the likelihood is you'll need landlord insurance in order to protect yourself financially. As with other home insurance policies, landlords insurance can provide buildings and contents cover.
- Buildings insurance: buildings insurance within landlord insurance provides you with compensation for the repair of the building and permanent fixtures of the home (such as bathroom and kitchen fittings) if they are damaged or lost in a fire, flood, storm, other natural disaster, collision or as a consequence of a leak or crime, or another insured event.
- Contents insurance: contents insurance within landlord insurance gives you compensation for the repair or replacement of furnishings and appliances you have provided with the rental property. Even if you’re renting out the property unfurnished, you’ll want contents cover for the appliances you are legally required to provide - these won’t be covered by a buildings insurance policy. Note that landlord content insurance policies don’t apply to the possessions that your tenants store in the property. They’ll need to take out their own insurance policy, sometimes called tenants insurance.
What additional cover can you get on a landlord insurance policy?
You can also obtain additional landlord insurance cover to protect you against the specific risks, liabilities, and legal obligations of being a landlord. These include:
- Damage or Theft by Tenants: covers you if your tenants steal your property’s contents or damage its furnishings, structure or fixtures, whether accidentally or deliberately. By contrast, standard contents insurance policies generally don’t cover theft unless there’s sign of forced entry and won’t cover deliberate destruction.
- Home Emergency Cover: if your rental property’s electricity, heating or plumbing fail, or if damage to windows and doors compromise its security, as a landlord you are legally required to repair them as soon as possible. Home emergency cover within your landlord insurance policy can reimburse you for the cost of emergency repairs.
- Property Owner's Liability: if a tenant or one of their visitors suffers harm as a result of a fault in your rental property, you can be held legally and financially liable. This provision covers you against claims for compensation and legal expenses. Look for a landlord insurance policy with at least £1 million of liability cover.
- Rental Protection Insurance/Loss of Rent: compensates you for any loss of rental income if the property is rendered uninhabitable due to an insured event.
- Tenant Default/Rent Guarantee Insurance: rent guarantee insurance is protection for your rental income and reimburses you if your tenants don’t pay rent. You’re generally entitled to payments equal to the rent you were charging—although typically capped at £2,500 a month. You qualify for these payouts after your tenants have failed to pay rent for two consecutive months.
- Legal Costs: covers your expenses if you incur legal costs pursuing legal help or action in disputes with tenants, including eviction proceedings, removal of squatters and the pursuit of lost rent.
- Unoccupied Property Insurance: most home insurance policies are invalidated after a property has been vacant for 30 or 60 consecutive days. Rental properties may be empty for this long between tenants and you’ll need unoccupied property insurance to secure them. To keep this cover valid, you may need to undertake regular check on the property.
- Alternative Accommodation insurance: this covers the cost of temporary alternative accommodation if your rental property becomes unusable, for example as a result of a flood or fire. The cover should run up until your property is made habitable again and tenants are able to return.
- Rent Guarantee: often part of legal expenses cover within landlord insurance, rent guarantee insurance covers for unpaid rent after you have served an eviction notice. It will also cover the cost of repossessing the property. Rent guarantee insurance offers peace of mind if your tenants hit financial difficulties and become unable to meet their rental payments.
Who is landlord insurance for?
Landlords insurance is for owners who rent out residential properties for long periods of time. Landlords of commercial buildings will need to obtain a different type of insurance.
Specialist landlord insurance isn’t a legal requirement, but it’s a wise financial precaution. Additionally, some lenders will require you to take out landlords insurance as a condition of your buy to let mortgage.
Standard home insurance won’t be sufficient for rental properties, failing to protect you against eventualities like deliberate damage by tenants and theft of contents by them. It also won’t give you the legal and financial protections you may need as a landlord, including liability insurance and rental guarantee. A standard home insurance policy will be invalidated if you rent out the property.
If you have multiple residential rental properties, you may be able to secure a single landlord insurance policy for all of them, saving you hassle and money.
How to Save Money on Landlord Insurance
Ensuring you're not overpaying for your landlord insurance while still receiving comprehensive coverage is crucial. Here are some tips to help you save money on your landlord insurance without compromising on the protection you need for your rental property.
Shop Around and Compare Quotes
Don't settle for the first quote you receive. Use comparison services like ours here at MoneyExpert to compare policies from different insurers. This will help you find the best deal that offers the coverage you need at a more competitive price.
Opt for a Higher Excess
Choosing to pay a higher excess can lower your premium. However, ensure that the excess you agree to is affordable, as you will need to pay this amount before your insurer covers any claims.
Bundle Policies
If you own multiple properties, consider insuring them under a single policy. Many insurers offer discounts for multiple properties, which can save you time and money.
Review Your Coverage Annually
Your insurance needs may change over time. Review your policy annually to ensure it still provides the coverage you need. Remove any unnecessary extras that may be inflating your premium.
Implement Security Measures
Insurers often offer discounts for properties with enhanced security features, such as burglar alarms, smoke detectors, and secure locks. These measures can reduce the risk of claims, potentially lowering your premiums.
Pay Annually
If possible, pay for your policy annually rather than monthly. Insurers often charge extra for the convenience of spreading payments, so paying upfront can save you money over the year.
Maintain a Good Claims History
A history of few or no claims can qualify you for a no-claims discount on your landlord insurance. Maintain your property well and address issues promptly to avoid unnecessary claims.
Understand Your Policy
Ensure you fully understand what your policy covers and any exclusions. This knowledge can prevent you from paying for overlapping coverages or for features you don't need.
How do you compare landlord insurance quotes?
The best way to compare landlord insurance and find a policy that provides all the cover you need is to shop around. Money Expert is a price comparison site and can help you get competitive landlord insurance quotes from specialist insurance brokers, helping you find the best available landlord insurance policies for price and terms.
To get quotes for landlord insurance, you’ll need to supply the following information:
- the rental property’s address
- the date the rental property was built
- how long you have owned the rental property
- the type of property (flat or house). If it’s a flat, you’ll also need details about the building it’s in and its use (residential or commercial)
- details of the location of the property, including whether it’s in a flood plain or near large trees or has experienced subsidence
- information about the security of the property, including its lock and alarms
- whether the property is fitted with smoke and carbon monoxide detectors (These precautions are typically required as a condition of landlord insurance. Not having them, or not having working ones, could invalidate any claims you make on your policy. So, make sure you’re testing them and replacing batteries.)
- details about the tenants living in the property, including their occupations and the length of the tenancy agreement. Insurers see thorough tenant referencing as a risk management strategy and may reward you with lower premiums on your landlord insurance.
- details about yourself and any claims you’ve made on other insurance policies in the last five years
