If you’re looking to start a buy-to-let portfolio, or an existing landlord looking to protect your investment, then landlord insurance can help keep you. We explain what the typical policy covers, and some of the best providers on the market.
Renting out a property carries different risks to owning a home. For one, you don’t have any control over how your tenant behaves nor do you have the ability to pay their rent on time for them.
This is why some landlords decide to use a specialist form of insurance, a landlord insurance policy.
In this article we explore:
- What is landlord insurance?
- How much is landlord insurance?
- The best landlord insurance policies
- Do I need landlord insurance?
Read more: Buy-to-let mortgages: what you need to know
What is landlord insurance?
Landlord insurance covers your rental property against its set of unique risks. Also known as buy-to-let insurance, this cover extends to more than just the typical residential rental home. Some providers also tailor their cover for commercial landlords.
What these policies cover depends on the provider, so below we’ve listed what the typical policy could include:
What does landlord insurance cover?
- Buildings insurance – In the event your rental property is burned down or permanently damaged, then your insurance could pay for the cost of repairs.
- Landlord contents insurance – If your home comes with some furnishings, then this could be protected under the contents insurance section. It’s worth noting that this only applies to your possessions as the landlord. It is the responsibility of your tenant to provide cover for their own items.
- Public liability insurance – If you’re renting out your home there is always the possibility that someone could be injured on your premises. This could be from a falling roof tile to an office worker slipping across a wet floor. Whatever the instance, you could find yourself having to pay compensation. Public liability insurance protects your legal and potential compensation costs. It is something which some commercial landlords might consider, especially if you’re renting out a factor operating dangerous machinery.
- Rental guarantee – Despite your best efforts to reference your tenant,there is always the possibility that they’ll default on their rent. Some policies let you claim for missed rental payments so you can keep repaying your buy-to-let mortgage.
- Loss of rent – This is different to a rental guarantee because it protects the landlord if their property is inhabitable for a certain period. This could be after a flood or fire which forces the tenant to move to a new location.
- Home emergency – Like home emergency cover for residential properties, this feature is also available for landlords if their tenantwakes up to a broken pipe or electrical failure.
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How much is landlord insurance?
Like with all types of insurance, your premiums will depend on your risk factors and how much cover you’re looking for. Factors which could influence your risk profile includes:
- Your property’s location – Places situated in high-crime areas will attract higher premiums.
- What type of property you’re insuring – A commercial building with a higher value will likely require a more expensive premium than the average residential home.
- Your level of cover – Comprehensive insurance policies naturally attract higher prices. So if you want to drive down the price of your premium consider what added cover you could do without.
- Your tenants – Some insurers see students as a more risky tenant than a working professional. So this could affect your premiums.
To give you an idea of what you could pay, insurance provider Towergate said 20% of its new customers were eligible for a quote of just over £18 a month. This was for its standard buildings cover, which doesn’t include landlord contents insurance or other extras.
The best landlord insurance policies
In the market for a new landlord insurance provider? Consider some of the options below:
Key features:
– Defaqto five-star rated landlord insurance
– Malicious damage by tenant included as standard
– Unoccupied properties covered up to 90 days
– Accidental damage, theft by tenant, and alternative accommodation included as standard
Alan Boswell Group are multi-award winning landlord insurance brokers, with their cover extending across a range of properties from commercial buildings to AirBnBs. Notably, they offer a price guarantee beater – which promises to beat your renewal terms from another provider (terms and conditions apply).
If you wish, Alan Boswell provides added services you may find useful. For example, buy-to-let landlords can vet their prospective tenants with tenant referencing or take out landlord home emergency cover.
Key features:
– Offers both commercial and buy-to-let insurance
– Unoccupied properties covered up to 60 days
– Protection against a wide range of perils, including – but not limited to – fire, storm, flood and landslip
– Flexibility to include/exclude subsidence cover
– 24-hour claims assistance, 365 days a year
Swinton has provided landlord insurance for 15 years and counting. Like some of its competitors, it offers cover for one property or your entire portfolio. However, cover for theft of keys, landlord’s contents cover, and malicious damage caused by tenants isn’t included as a standard and must be negotiated onto your policy.
Towergate
Key features:
– Cover available for your entire portfolio or just one building
– Optional landlords emergency cover
Towergate has provided specialist insurance since 1998. Premiums for their landlord insurance start at £18.07 a month, after which you can make add-ons to your policy. This includes landlord contents insurance, public liability cover, and accidental loss of keys.
Direct Line
Key features:
– Insure up to 15 properties under one policy
– 0% interest option for the first year if you wish to pay by instalments
– Specialist legal advice available
Direct Line is part of the Direct Line group, one of the largest insurance providers in the country. This group includes other companies such as Churchill Insurance and Green Flag.
However, its standard landlord insurance covers a range of different events which other providers only include as extras. For example, it includes boiler cover, public liability, and alternative accommodation if you have to rehouse your tenant as a standard. Optional add-ons include rent guarantee, malicious damage from your tenant, and landlord emergency cover.
Do I need landlord insurance?
Like home insurance, landlord insurance isn’t a legal requirement. But given that your property portfolio will likely be extremely valuable, it may be a good idea to keep it protected. Unlike shares, properties are tangible assets, so if it’s damaged it could suffer a loss of value.
In addition, if you’re looking for a buy-to-let mortgage then lenders will require you to have some sort of insurance in place before lending you money. This doesn’t only protect them, but it protects you if the worst happens. For example, if your rental property burns down you’ll still need to pay off your buy-to-let mortgage. This can lead to significant debt if you’re not receiving your rental payments.
What information do I need to apply?
Your insurer will likely ask for the following details:
- Property details – This includes when it was built, location, and if it is a commercial or residential let.
- Your tenants’ details – As mentioned, while your tenant’s occupation can affect your claim, so too will their lifestyle habits. For example, some insurers want to know if your tenants are smokers or house pets.
- Claim history – As with many types of insurance, a history of previous claims will impact your insurance premium.
FAQs
Is landlord insurance tax deductible?
Yes, landlord insurance is tax deductible. This means you can use it to lower your bill to the HMRC.
Can I get multi-property landlord insurance?
Yes, many providers offer this feature. Not only can it make the overall cost of your policy cheaper but it also makes it easier to manage everything if it is in one place.
Can I get covered with a standard home insurance policy?
No, buy-to-let insurance is different to home insurance. This is because it carries different risks, so your premiums will need to adjust.
Do I need landlord insurance for renting out a holiday home?
No, there is specialist holiday home cover available through other providers.
Do I need landlord insurance if I live in the property?
This depends on your circ*mstances. Airbnb owners and hotel managers who live on premises might have to take out landlord insurance, but it is always best to speak to your provider. Meanwhile, if you let out your property to a single tenant, then you could look at an add-on to your policy, such as third party liability. Again, this varies case by case so get in touch with your insurer.
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
