What Insurance Do You Need as a Landlord?

Written By PropertyLoop
April 06, 2021

In many ways landlord insurance policies are not too dissimilar to your everyday home insurance cover; however the important distinction between the two is that landlord insurance is intended to provide financial cover exclusively for rental properties.  Typically, rental property owners will encounter three different types of landlord insurance policies, offering cover on the rental building, its contents, and any unforeseen accidents that take place in the property.

The most common landlord insurance policies include contents insurance, buildings insurance and liability insurance, with additional cover for missing rent, expenses accrued through legal action and accidental damage to the rental property also being available.

Buildings Insurance for Landlords

Landlord building insurance is essential in the instance that any damage occurs to the structure of the rental property. These policies will typically protect the landlord if their rental property is subject to any damage through a fire, flooding, burst pipes, subsidence, natural occurrences and vandalism.

Contents Insurance for Landlords

Whilst this may not be a concern for all landlords, those that intend to let out their rental property to tenants in either a partly, or fully furnished state may want to consider contents insurance for landlords. These insurance policies will provide the costs for a replacement or repair work if any of the landlord’s items are damaged or stolen.

With this being said, traditionally landlord contents insurance policies tend to not cover any damage to a landlord’s possessions that is considered “Accidental” as this would require a separate policy to be taken out. Typically the policy will safeguard the landlord against the full costs of replacing or repairing fixtures throughout the property such as carpets, curtains and furniture.

Before taking out a contents insurance policy it is important to understand that none of the tenant’s possessions will be protected through the cover, with only the landlord’s belongings being applicable for a claim; however, tenants are still able to take out their own contents insurance.

Liability Insurance for Landlords

Occasionally referred to as public liability cover, liability insurance for landlords will offer financial security to a property owner in the event of an accidental injury taking place in the rental. It goes without saying that simply having a liability insurance policy in place does not excuse any shortfalls with the properties safety or habitability, with this responsibility still firmly being placed on the landlord. With that being said, if a tenant or guest in the rental property was to experience an accident that resulted in serve injury, illness or death then the implications could financially ruin a landlord, making these policies an unfortunate necessity.

Loss of Rent Insurance

Sometimes known as tenant default insurance, these policies offer additional financial stability to a landlords, allowing them to claim if a tenant accumulates rental arrears, refuses to vacate the property following an eviction, stops paying rent due to remedial works, or if the tenant causes malicious damage to the rental property.

Whilst most policies will provide the landlord with a their missing rent for up to 12 months, providing it doesn’t exceed £2,500, some will even offer up to 50% of a landlords rental charge if they are searching for new occupants. However, insurance provider’s demand that before a claim can take place the landlord must contact with the tenant to establish why the rental payment has not been made, with a short period following this to try and resolve the matter before auctioning any notices to the tenant and making a claim. If the tenant failed the credit history and affordability checks during the referencing process then the landlord may find it difficult to claim for this missing income.

Are Landlords Legally Obliged to Have Landlord Insurance?

Whilst landlords are not strictly required to take out an insurance policy to cover their rental properties, as mentioned above, a standard home insurance policy will not be sufficient when the property is occupied by tenants. Additionally, if the owner of the rental property has taken out a buy to let mortgage, it is highly likely that whist the law will not obligate the landlord to be insured, the mortgage provider will. The mortgage lender will usually demand that the landlord insurance policy is in place before any tenants move into the rental property. Additionally, mortgage providers will require that landlords first seek their permission before renting to tenants or this could be considered a breach of the mortgage’s conditions.

Do You Need Landlord Insurance if Renting to Family Members?

In recent years the amount of landlords renting out their property to family members has only increased, with the landlord being able to enjoy a stable income with a tenant they are confident will respect the property. However, some property owners and occupants see this as an opportunity for a more relaxed and informal rental dynamic; and whilst this may initially seem appealing to both parties it is important to keep in mind that they both have legal obligations and responsibilities to uphold. If a formal tenancy agreement is not in place then this could place the landlord in considerable jeopardy should the relationship sour, making it more difficult to collect rent, evict the occupant, and of course, obtain landlord insurance.

When Will Landlord Insurance Be Rejected?

Similar to many other types of policies and cover, it is ultimately up to the discretion of the provider as to whether the rental property owner is accepted for landlord insurance. It is essential for aspiring and new landlords to review these potential pitfalls as they will present a significant hindrance if left unchecked.

It is not uncommon for landlord insurance providers to reject an application for cover is the rental property in question is going to be vacant for extended period of time. Whilst this presents issues during new occupants moving in or void periods, with the standard clause noting that cover will be refused if the property is empty for more than eight weeks.

Landlord insurance providers may also take issue with the structural composition of the rental property; with any plans for extensive renovation works being capped at £250,000. Alongside this, many landlord insurance policies exclusively provide cover to rental properties that have a “standard construction”, with rentals that have flat roofs being particularly hard to insure as they have an increased risk of leaking.

Landlords may also face difficulty finding an insurance provider if they unfortunately have a poor credit history. Naturally, this will make the landlord look like a greater liability to the insurance company with an assumption they may struggle to meet the excess fee if a claim was ever to be made. Similarly, a sting of multiple rejections for insurance from a variety of providers will also be a huge deterrent, likely not helping the landlord become accepted for a policy. Likewise, if a landlord has recently faced bankruptcy or has had a number of County Court Judgments issued in their name then an insurance provider has proven to historically be less likely to accept any applications for cover on a rental property.

Landlords can also be rejected by insurance providers in the event that they are unable to produce a written and valid tenancy agreement for their current occupants. It is highly recommended that landlords have a physical agreement between themselves and the tenants, with the absence of such a document will provide a whole host other issues for landlords. Additionally, if the tenants of a rental property decide to sub-let out the rental to another occupant then not only may this be in breach of the original tenancy agreement, but this would prevent the landlord from maintaining cover through their insurance policy.

Lastly, whilst this is good practice to safeguard an investment, hence why we are looking at insurance, adding security measures such as cameras, additional locks and alarms to a rental property will offer tenants peace of mind whilst increasing the landlord favourability to potential insurance providers.

How Do I Make a Claim on My Landlord Insurance?

If a landlord plans to make a claim on their insurance it is essential that they establish contact with their insurance provider as soon as possible to avoid the claim being dismissed. Once the insurance claim has been made the landlord will be required to provide ample evidence to their provider, detailing why a claim is being made, the associated costs of remedying the situation; alongside any supporting invoices, documents and photographs.

Of course, what a landlord is able to make a claim for is largely dependent on the type of landlord insurance cover they took out and the degree of cover their provider offers. The insurance provider may also request that a representative assess the property once a claim has been made to inspect any damage to the rental that is being claimed for.

Whilst this will once again largely depend on the policy taken out by the landlord, the rental property owner may also be required to pay an excess before their claim is handled. Of course, specific amounts will vary between providers, and some will simply deduct this from the amount being claimed, either way the amount the landlord pays towards their insurance is likely to increase upon the next renewal term as they will be considered more likely to make additional claims.

With this being said it is possible for a landlord’s insurance claim to be rejected by the provider. Again, what a landlord is able to claim for is dictated by their policy, so it goes without saying that any claims made for damages or instances not covered by the landlord’s specific insurance policy will be rejected. Similarly is the landlord tries to make a claim regarding any wear and tear that would naturally occur after successive tenancies would also be dismissed. As previously mentioned the landlord must ensure that their claims are made within a specified time period of the event, any claims reported outside of this period will be considered void.

 However, this is not the only responsibly of the property owner when claiming on insurance as the landlord is required to guarantee that all information given to the insurance provider is correct and routinely updated with details such as new tenants, any void periods, fluctuations in how much the occupants pay in rent, and any changes to the structure and contents of the rental property. If the landlord fails to provide this accurate information to the insurance company then any attempted claims could be rejected.

How Can I Reduce the Cost of Landlord Insurance?

As always, it is advised to shop around and look at multiple providers and packages before coming to a decision on which landlord insurance policy to pay for. With landlords needing varying degrees of financial protection, some insurance providers will offer package deals comprising multiple policies that could save property owners significant sums in the long run. With this in mind, including unnecessary insurance policies to your cover will only serve to increase the amount paid to the providers.

Each time a landlord makes a claim on their insurance policy they will be required to make a contribution towards the associated costs. Commonly referred to as “excess”, if the landlord chooses to pay a higher amount upon each claim then this could significantly reduce the amount they pay to maintain the policy. Similarly this negotiation can work the other way if the landlord finds this to be more favourable, with a higher upfront cost  reducing the amount a landlord will have to pay in excess upon each claim.

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Buy-to-letInsuranceLandlord AdviceLandlord Regulations

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