With rental property owners having enjoyed low insurance premiums for the last two decades, recent announcements that the interest rates set by the Bank of England will see imminent change, alongside a 5% increase in inflation over the last 12 months, owners are bracing for higher landlord insurance premiums. But, with many on the fence over what landlord insurance policies are essential, we ask what insurance you need as a landlord.
Is It a Legal Requirement to Have Landlord Insurance?
It is worth noting that in no way are rental property owners legally required to obtain a landlord insurance policy. With this being said for towners that will need to take out a buy to let mortgage to cover the cost of their rental, it is common that mortgage providers will demand that a building insurance policy will be taken out at a minimum.
What Insurance Must a Landlord Have?
As mentioned commonly the only insurance policy landlords are somewhat required to obtain would be buildings insurance upon the request of their buy to let mortgage provider. With this being said it would be unwise for a landlord to proceed into a tenancy, or make efforts to establish a sizeable rental portfolio without the adequate financial protection afforded through insurance.
What Insurance Do UK Landlords Need?
Building insurance aside, many landlords, most notably those that provide their occupants with a fully or partly furnished rental opportunity will need to take out contents insurance. Similarly to residential contents insurance, such policies will cover the cost of repairing or replacing the upholstered items and other furnishings that the landlord introduces to the property. However, it is worth noting that such landlord insurance policies will not offer any protection to the occupants of the property, requiring them to take out their own contents insurance for their belongings.
Alongside this, landlords will also commonly obtain liability insurance. Put simply this offers the landlords monitory protection should a tenant, or a guest suffer an injury within the grounds of the rental property. Landlord liability insurance will typically cover any legal costs the landlord incurs, however these policies are no substitute for ensuring the property being provided is safe and well maintained.
Does Landlord Insurance Cover Loss of Rent?
As can be expected a landlord is not able to simply take out any policy and have any loss of rent covered by the provider. As with the other aspects of safeguarding their portfolios, landlords will need to obtain a specific policy from the insurance provider, aptly referred to as loss of rent insurance.
With this being said it is essential that landlords understand that loss of rent insurance will exclusively pay missed rent to the landlord if their property is deemed uninhabitable as a result of an unforeseen event that forces the occupants to leave the premises. Typically utilised by landlords that have seen their rental income be impacted by fires, flooding or storms, loss of rent insurance is not to be confused with rent guarantee policies that aids the landlords during times where their tenant’s begin accumulating rent arrears.
Do I Need Insurance if Renting to a Family Member?
It is not uncommon for even established landlords to feel they may not need to take out insurance or go to the usual lengths of protecting their income when letting out their property to close friends or family members, however, this is not the case.
Simply because the occupants of the property are close to the owner dopes not dismiss the financial stress a landlord will find themselves in if the property were to be impacted by burglary, fire, flooding or malicious damage to name a few. As always, owners should remember that even if their tenants are family, they will not be able to maintain a tenancy with traditional residential home insurance, not only would such a policy be deemed invalid, but landlords will also find that providers will not pay out if residential cover has been taken out for a rental property.
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