What Is the Difference Between Homeowners and Landlord Insurance?

Written By PropertyLoop
March 03, 2021

Not having the proper coverage in place can cost landlords thousands and with mortgage payments, management fees and the many other costs that come with letting as property, knowing which insurance you need as a landlord is imperative! 

Do I Need Both House and Landlord Insurance? PropertyLoop

Do I Need Both House and Landlord Insurance? 

Typically landlords will be required to take out building insurance for their rental property, however, it is also likely that over the course of their tenancies they will come to depend upon one of the many other policies providers offer. This is because whilst buildings insurance will offer the landlord cover if the property becomes damaged and is in need of repairs, it will offer little protection if alternate accommodation needs to be arranged for the occupants, or the tenants have stopped paying rent, leaving the landlord without a rental income.  

What Insurances Do I Need as a Landlord?    

Contents Insurance  

As the name suggests landlord contents insurance will cover the items found within the rental property against theft and damage caused through fires, flooding, lightning and leaks, although the specifics will of course vary between insurance providers.  

It is also worth noting that the landlord’s contents insurance policy will not offer any financial protection over the belongings introduced to the rental property by the occupants, meaning that they will need to take out their own contents insurance policies.

Rent Guarantee Insurance  

Typically, rental guarantee insurance is favoured by landlords as it will cover any unpaid rent for either a set period or amount, allowing the landlord to remain confident in the predictability of their income meaning they won’t be left to cover any mortgage payments, management fees and advertising costs whilst no rent is being paid. Again, whilst the exact nature of the cover will vary between policy providers, some will also cover any legal fees the landlord may incur during their pursuit of the tenant for the repayment of their rent arrears.  

Liability Insurance 

Liability insurance will protect landlord in the event that any claims of damage or injury are made by the occupants or their visitors to the property. As can be expected any rental property being offered should be completely safe and free from any damage that could present a risk to the occupants, guests and other third parties invited into the property, but if things do go wrong, liability insurance will cover any compensation and legal fees the landlord incurs.  

What Is the Difference Between Home Insurance and Landlord Insurance?   PropertyLoop

What Is the Difference Between Home Insurance and Landlord Insurance?   

Thankfully when letting out a rental property owners will not be required to have both house and landlord insurance. As a requirement for many buy to let mortgages, providers demand that landlords take out building insurance, safeguarding the structure of their property in the instance of repairs. But, even this basic policy differs from its residential counterpart, meaning that landlords must have appropriate cover in place when letting a property. This is because whilst residential home insurance and landlord building insurance will both offer the owner monetary protection in the event that the property is damaged, if the occupants of the property are tenants, then the residential insurance may not offer the owner any compensation, making the policy redundant.  

With this in mind it is simply to see how the policies intended for residential home owners does not offer any protection in many of the greatest concern a landlord could face, typically a loss of rent, damage to the property, needing to provide the occupants with alternative living arrangements and liability coverage in the vent that a tenant or one of their guests is injured within the grounds of the rental property. 

Is Landlord Insurance Worth Having? 

As mentioned, many landlords will be required to take out building’s insurance thanks to the requirements of their buy to let mortgage, with those that choose to let out their property without such cover in place likely being found in breach of their mortgage’s terms making it far more difficult for them to take out a loan in the future. Whilst some new landlords may be quick to dismiss many of the landlord insurance policies, unfortunately, if they encounter a problem tenant that proves reluctant to pay rent or perhaps even causes damage to the rental, the landlord will have little recourse or financial protection.  

As can be expected landlords are under no obligation to take out every policy deemed useful for a landlord. Even those with the most extensive portfolios will only need a handful of landlord insurance policies, with those that are letting unfurnished properties finding little use for contents insurance and even those that request their tenant’s source a guarantor being less inclined to take out rent guarantee insurance policies.  

 

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InsuranceLandlord AdviceNew Landlords

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