What is landlord insurance and do you need it?
What exactly is landlord insurance?
Landlord insurance is similar to house insurance, except it is developed exclusively for rental properties. Buildings, contents, and liability insurance are the three primary forms of landlord insurance. Aside from this, there are a variety of add-ons that you may find handy depending on the sort of house you're renting. Typically, insurance is purchased on a property-by-property basis. Portfolio insurance is provided to landlords who own four or more rental residences and wish to insure them all at once.
Types of landlord insurance
Buildings insurance covers any damage to your property's structure as well as the expense of rebuilding it if it is permanently ruined. You won't be able to get a buy-to-let mortgage unless you have proof of buildings insurance, and most lenders will define the minimum amount of coverage they demand in their terms and conditions. If the property is a flat in a building, buildings insurance is normally included as part of a shared block policy, which you will pay for as part of your service charge.
Buildings insurance plans usually cover the following forms of damage:
- Theft, vandalism, and deliberate harm
- Storm, lightning, and earthquake damage (may be limited to the building itself rather than fences etc)
- Burst Pipes
- Fire or Smoke damage
- Oil or Water damage
When it comes to damage that occurs within individual flats, such as a fire or water leak, there may be gaps in building coverage. As a result, it's critical to double-check the policy's coverage and consider purchasing your own landlord insurance to cover any exemptions.
Contents insurance is often available as a separate policy or as an add-on to building insurance. The amount of contents insurance you'll require is determined by whether you're renting out a furnished or unfurnished house. A contents insurance policy will cover the cost of repairing or replacing fixtures and fittings such as carpets, furniture, and electrical equipment if they are destroyed in a flood, for instance, and some plans can also cover accidental damage to things. Landlord contents insurance only covers goods that you have provided in the property. Anything belonging to your renters, from personal items to furniture, will not be protected; therefore tenants should obtain their own coverage as well.
Liability insurance protects you if a renter or a visitor is injured on your property. This insurance, also known as public liability protection protects you financially against unanticipated incidents, but it should not be used as an excuse to not make the property as safe as possible for your renters. Liability insurance policies can feature exceptionally high coverage limits that might reach millions of pounds, which may be required if you are found legally responsible for an accident and must pay compensation.
Rent guarantee insurance
Rent guarantee insurance (also known as tenant default insurance or rent receivable insurance) covers you if your renter falls behind on their rent and, in some situations, during any void periods when the property is vacant. Rent guarantee insurance typically includes legal fees coverage, which covers the costs of repossession and eviction procedures if necessary, in addition to lost income from late rent payments. This insurance can be beneficial for landlords who rely on rental revenue to meet mortgage payments, but first verify your contract with your management agency (if applicable), as you may already be insured.
Home emergency cover
Home emergency protection protects you against the loss of critical services in your home around the clock. These plans should cover the cost of repairs and allow you to get services back up and running promptly.
Home emergency insurance often protects against the following issues:
- Plumbing and heating issues (You may have to pay an additional fee for boiler coverage.)
- Roofing issues
- Problems with the doors and windows
- Drainage, pipe, and sewer issues
- Problems with electricity
- Lost keys