What Insurance Do You Need As a Landlord? - Property Sundays (2024)

Last updated on 12th February 2024

As a landlord, your property is both an investment and an income. Covering yourself for a potential risk isn’t just sensible; it safeguards against damage from tenants, loss of rent, and also the destruction of the building itself.

But what insurance do you need as a landlord? Conventional home insurance isn’t sufficient to protect a property once rented out. That’s why most insurance providers sell dedicated landlord insurance policies.

In this guide, we explore the different types of landlord insurance, why each matters, and what they involve.

We cover:

® What Insurance Do You Need As a Landlord?

® What is Landlord Insurance?

® Other Types of Insurance for Landlords

® Specialised Policy Add-Ons

What Insurance Do You Need As a Landlord?

When talking about insurance as a landlord, you should differentiate between the liabilities to the landlord and those to the tenant. As a general rule, the landlord is responsible for the property’s physical structure alongside any aspects of the property that are permanently attached.

Some landlords (especially those renting furnished properties) will also want contents insurance covering furniture and appliances.

Tenants, on the other hand, are responsible for all their belongings inside the property. Any changes they make to the physical structure, e.g., painting the walls, is not covered by any form of landlord insurance.

Landlords, therefore, only require insurance to cover three specific aspects of their property: (1) the structure, (2) the contents owned by the landlord, and (3) inadequate rent payments (for certain reasons).

What is Landlord Insurance?

Landlord insurance is a type of insurance policy specifically designed for property owners who rent their properties to tenants. Usually, most landlord insurance policies cover property damage to the building due to fire, storm, vandalism, or other perils; liability protection, should a visitor suffer injury on the property due to maintenance issues or neglect; and some other aspects, like loss of income or rent guarantee, depending on the chosen policy.

Landlord insurance normally comes in two parts:

1. Landlord Building Insurance covers damage to the property itself, such as from fire, floods, or vandalism. Read the specific details of your policy to learn what risks are covered. Alongside the building, any items permanently attached to the property are also covered.

2. Landlord Contents Insurance, on the other hand, covers the repair and replacement of free-standing items owned by the landlord within the property. Common examples include furniture, appliances, and home furnishings. Items are only covered for damage, theft, or loss; normal wear and tear during a tenancy is not covered.

Other Types of Insurance for Landlords

Apart from the standard landlord insurance policies covering property damage, liability, and loss of income, landlords in the UK can consider additional types of insurance to further protect their investment and income.

These additional insurance types cater to specific risks and situations not usually covered under a basic landlord insurance policy.

Landlord Liability Insurance

Landlord liability insurance is essential for all landlords. Should a person, either a tenant or visitor, become injured on the property due to negligence, the landlord could be legally liable for injury or damage.

For example, if a tenant were to injure themselves by tripping over a loose carpet the landlord failed to secure, the landlord could be held responsible for loss of income and other expenses.

Liability insurance for landlords covers these costs, as well as legal fees associated with defending a claim. This aspect is often included within a standard landlord insurance policy. However, landlords should review the level of coverage to ensure it is sufficient for their needs.

Tenant Default Insurance

Tenant default insurance, or rent guarantee insurance, protects landlords when tenants cannot pay their rent. Economic downturns, unforeseen job losses, and other financial difficulties can create the perfect storm for tenants, preventing them from meeting their rental obligations.

In such circ*mstances, the landlord can issue an eviction notice and also claim back the money they are owed. Usually, such policies cover a specified period, e.g., a maximum of 6 to 12 months, depending on the policy.

Loss of Rent Insurance

Loss of rent insurance covers landlords for lost income when their property becomes uninhabitable due to an insured event, such as fire, flood, or other significant damage. Whatever the cause, so long as the property cannot be rented to new tenants due to the damage, the policy will provide coverage up to a certain amount. The coverage typically lasts for the duration of the repairs, up to a limit specific to the policy.

Specialised Policy Add-Ons

In addition to the various policy options available, landlords can also supplement their current policy with “add-ons” for specific eventualities. These include:

• Unoccupied Property Insurance. This insurance provides protection for properties during periods they are not occupied, commonly known as void periods. To ensure continuous coverage, the policy might require the property owner to conduct periodic inspections of the property.
• Landlord Home Emergency Insurance. Offering round-the-clock assistance, this policy addresses emergencies related to plumbing, drainage, heating systems, and electrical supply. It also covers repairs to doors and windows that are necessary to secure the property.
• Alternative Accommodation Insurance. When a property cannot be lived in due to damage from an insured peril like fire or flooding, this insurance covers the costs associated with providing tenants with alternative lodging until the property is again habitable.
• Legal Expenses Insurance. This coverage handles legal costs related to property management, including eviction procedures and litigation for rent arrears. Policyholders also gain access to legal advice from experts in property law, ensuring they have the necessary support to navigate legal challenges efficiently.

Learn more about the UK property market with our other guides and articles. You’ll find helpful information for first-time buyers, landlords, and home sellers.

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