Landlord insurance protects landlords from risks that may be associated with their rental property. This includes unanticipated costs like building or content damage. As with other insurances, it works in a similar way by protecting landlords that rent out their properties.
There are many different types of landlord insurances, but the main coverage of each typically includes liability, building, and contents insurance. You can gain additional coverage that aren’t insured within these packages at an extra cost (e.g. rent guarantee).
Just like car insurance, if you want to be covered, you will need to insure yourself per property. If you start to build a reputable renting portfolio, you can purchase insurance that will cover multiple houses. This is typically for landlords that own four or more homes and rent them out to tenants.
Do I Need Landlord Insurance
Another question that I am constantly asked by new landlords is “do I need landlord insurance?”.
No. You do not need landlord insurance as it is not a legal requirement. However, it would certainly be foolish not to get cover.
If you are still paying off the mortgage for the property, your lender may require you to get landlord insurance before taking on tenants. Also, before taking on renters, you’ll need to get written consent from your mortgage lender, otherwise known as “Consent To Let”. Failing to do so may mean that you are breaking the terms of your mortgage. If you don’t get consent to let, they will have the right to request a full repayment of the mortgage.
Even if your tenants have renters insurance, it still may be beneficial to have to ensure you are covered from both sides.
What Does Landlord Insurance Cover?
Landlord insurance shares similarities with regular home insurance, but instead of covering the house you live in, you insure the property the tenants are in. Let’s dive deeper into what this insurance generally protects as a whole.
Landlord insurance provides some much-needed coverage that is vital to keep your rental property safe. All insurances come in different packages, therefore may only consist of some of the below. Be sure to read through your policy carefully to understand what your insurance will cover.
This insurance will shield you from any liability claims and lawsuits that are made against you if an injury occurs in your rental property. This could either be a visitor, trespasser, or the actual tenant. Either way, not being covered with this can leave you in a legal muddle if a claim is made.
This coverage is similar to home insurance and covers you for any damage that happens to the building. From natural damages to vandalism, all insurances will vary on the damages they cover, but most will pay for rebuilding or replacing damaged areas due to natural events.
Loss of Income
This insurance will cover you if your tenants have had to move out due to an event that deems your house is no longer safe for someone to live in. For example, if your house encounters a fire and becomes uninhabitable, you will be covered by the loss of rent.
Lastly, I thought I would mention some of the additional coverages you are able to purchase to insure yourself that little be more. Each landlord will need slightly different insurance depending on their mindset, situation, and location. Add-on’s that you can purchase are:
- Employer liability insurance
- Landlord contents insurance
- Rent guarantee insurance
- Natural disaster insurance
- Home emergency cover
These are some of the optional extras that most insurance companies offer to their customers. If there’s coverage that you are wanting for something specific and it is not on this list, it may be best to contact your provider or future provider to see if they offer insurance that suits your needs better.
It is worth noting that landlord insurance does not cover the tenant’s contents.
How much does landlord insurance cost?
The amount landlord insurance will cost depends on several different conditions. Just like if you’d insure a Ferrari in London over a Fiat in the countryside, the higher risk of damage or theft is statically located in cities around England and the lavish price tag will also increase the insurance costs.
Factors that reflect on your landlord insurance:
- Type of property
- Number of tenants
- Price of contents you’re insuring
- The excess you choose
Above are the main factors that may increase or decrease your landlord insurance price. However, you may be able to decrease this by joining a Landlord Accreditation Scheme.
What is a Landlord Accreditation Scheme?
A Landlord Accreditation Scheme is run by local authorities that have connections to colleges, universities, or generally a landlord’s association. These schemes were made in attempts to ensure that future landlords are trained and signed up to a code of practice. In return for being a part of this scheme, you will be able to advertise your rental property via the program. Some insurances may offer an additional discount if the scheme has been legally signed off that you have participated.
You should now understand what landlord insurance is. Simply, it covers the property owner (the landlord) over several circumstances if they were to happen. Although not a legal requirement, you’ll probably be requested by your mortgage lender to get insurance before pursuing with tenants. Whatever you do, make sure you never break your mortgage policy and have a clear understanding of what you can do.
When choosing a landlord insurance provider, make sure you purchase coverage that suits you. One insurance may be perfect for a certain induvial, but yourself maybe not. If you can, read plenty of insurance packages to get an insight into what is currently circulating in the market.
James Banerjee is an Account Director who graduated from the University of Kent in 2014. He works in SEO on clients such as HSBC UK and Nestle and he has a keen interest in personal finances and money-saving advice.