Landlord Insurance Explained

The essential cover for BTL property investors. Protect yourself against flood, fire, storm damage, tenant default, and much more.

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Graham Cox - Founder & Cemap Mortgage Advisor | SelfEmployedMortgageHub.com
Graham Cox
CeMAP Mortgage & CPSP Specialist Finance Advisor

As a landlord, letting a rental property carries many additional risks that the prudent investor should insure against. In this guide, we explain why landlord insurance is so important, how it works, what the policy options are, and much more.

What is landlord insurance?

Landlord insurance is designed to cover, at a minimum, the cost of rebuilding or repairing your rental property in the event of loss or damage from events like fire, flooding, subsidence, and so on.

You can combine landlord building cover with contents insurance or purchase each as a standalone product.  

Landlord insurance is also known as buy-to-let insurance and is fully customizable with a range of optional add-on policies. For portfolio landlords, it can even be set up to cover multiple rental properties.

What's the difference between landlord insurance and home insurance?

A standard home insurance policy provides building and contents cover for your residential home. But it doesn't cover the specific risks landlords face when renting out property to tenants.

And just as mortgage lenders can insist on homeowners taking out building and contents insurance, they often require buy-to-let investors to take out landlord insurance when buying rental property.

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What does landlord insurance cover?

Landlord insurance provides property damage cover by default. But contents insurance and other policy add-ons are available for an extra charge.

Property damage

One of the key benefits of specialist landlord insurance is cover for property damage or loss due to:

  • storms/lightning strikes
  • flooding
  • fire
  • subsidence
  • landslip
  • heave of land
  • a motor vehicle colliding with your property

Damage to outdoor property spaces such as your garden, patio, or driveway is also covered by some policies.

Contents cover

The household contents inventory of your rental property can be insured against theft or damage. For example:

  • Damage to permanent fixtures and fittings such as built-in wardrobes, appliances, carpets and kitchen units
  • Theft or damage caused by fire, flood etc of any non-fixed items the landlord has provided. For example, beds, free-standing wardrobes, and sofas.
  • Accidental damage to building or content fixtures and fittings (service pipes, sanitary fittings, coffee tables, hi-fi equipment etc) is not covered as standard, but can be for an additional payment.

Property owner's liability insurance

Property owner's liability insurance is an add-on that covers the cost of compensation and legal expenses if you're found liable for an accidental injury to a tenant, tradesperson, or other person whilst they're on your property.

For example, if a tenant tripped and injured themselves because of a loosely fitted carpet, you could be found liable for compensation.

Legal fees are often included with the policy, as is accidental damage to the person's belongings.

Loss of rental income

Optional cover that allows you to claim lost rental income if your tenants are forced to move out of your property due to flooding, fire, storm damage, or another insured event.

Many policies cover the cost of providing alternative accommodation for your tenants whilst your rental property is repaired or rebuilt.

Tenant default insurance

Also sometimes referred to as rent guarantee insurance, optional tenant default cover allows a landlord to claim unpaid rent if a tenant gets into financial difficulty. For example, if they're made redundant.

Typically you'll be required to serve an eviction notice but you can claim from the first missed payment and up to 12 months of rent are covered.

Rent guarantee insurance can also pay out if your property is uninhabitable for a period due to malicious damage by the tenant.

No-claim discount protection

This option is often only available if you've not claimed against a landlord insurance policy in the past five years. The add-on protects your no-claims discount when you make a first claim.

Alternative accommodation cover

If your Assured Shorthold Tenancy (AST) agreement stipulates that you must provide alternative accommodation for your tenants if an insured event like flooding or fire damage occurs, this policy add-on will fund the cost.

It will continue to pay until your property is repaired and inhabitable again, or the policy ends. Whichever comes first.

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Is landlord insurance mandatory?

Landlord insurance isn't legally required, but banks and building societies often make their mortgage offers conditional on the borrower taking out appropriate landlord insurance.

So you should factor in the cost of taking out cover when making an investment decision.

How much does landlord insurance cost?

The cost of landlord insurance varies considerably depending on the:

  • Type of property (house, flat, semi-detached, terrace etc)
  • Property value
  • Estimated cost of rebuilding/reinstating the property
  • The age of the property
  • Optional policies added to the basic landlord insurance plan
  • Type of tenants (family, students, professionals, welfare claimants etc)
  • Location
  • Number of properties on the policy
  • Previous claims

All the above factors and more are considered in the round by the insurance provider before they provide a bespoke quote.

How to get a landlord insurance quote

As you can see, taking out landlord insurance is essential even if you're just an 'accidental landlord'.

At SelfEmployedMortgageHub.com, we source affordable and competitive landlord insurance quotes from a wide range of mainstream and niche insurance companies.

Get in touch today either through our quick insurance quote form or by calling 0117 205 0655 to speak with an adviser directly. We look forward to finding the right deal for your circumstances.