Dec 01

Do You Need Landlord Insurance?

If you’re currently letting your property or considering letting in the future, you may be wondering if you really need landlord insurance. Landlords face many risks when renting their property to tenants, so it’s important to get all of the facts before making such an important decision. First, let’s discuss what landlord insurance is.

What is Landlord’s Insurance?

Landlord Insurance, as you may have guessed, is designed for landlords. It offers unique cover to protect landlords against common risks they face on a daily basis.

A typical landlord insurance policy will include similar cover to what a home insurance policy would offer, but also includes additional cover that is unique to landlords.

What the Policy Covers

Policies offered by reputable insurers will generally offer the following cover:

  • Building. This protects the structure itself should a fire, flood or subsidence cause damage or losses. Not only will the cost of repairs be covered, but rebuilding costs as well. Many insurance companies are now offering unlimited cover, but not all do. For this reason, it’s important to assess the value of your property to ensure that you’re purchasing adequate cover should you need to rebuild.
  • Contents. Contents insurance is essential cover, particularly if your property is furnished. This will protect any contents that you, as the landlord, own, such as TVs, carpet, sofas, beds and any other items that you provide your tenants with. Please note that this cover will not protect your tenant’s belongings. They will have to purchase their own contents insurance to receive this protection.
  • Loss of Rent. Accidental damage or a natural disaster may destroy your property and cause it to become unlivable. If your property becomes uninhabitable, loss of rent will provide you with compensation for lost rent. If you have a mortgage on your property, this cover becomes particularly important. Without it, you may struggle to make your mortgage payments on time. Loss of rent may also cover legal costs associated with evicting squatters, tenant disputes, property repossession and tenant-related other incidents.
  • Landlord liability. If someone is injured while on your property, you may be held liable for damages awarded to the injured person. With personal injury claims on the rise, it’s increasingly important for landlords to obtain this cover. Claims can often be substantial, soaring as high as £100,000 or more. Although cover ranges from one insurer to the next, most will offer standard cover up to £2 million.
  • Alternative accommodation. If your property becomes uninhabitable, alternative accommodation will cover the cost of relocating your tenants. Most insurers include this cover with their policy, but some will not. Instead, it may be offered as an optional cover that requires an additional fee.

The majority of landlord insurance policies will offer the above-mentioned cover. However, you can also purchase supplemental cover to ensure your property is fully protected.

Additional cover may include:

  • Home emergency repairs – Provides your tenants with access to emergency maintenance assistance. This assistance is available 24 hours a day, 365 days a week.
  • Rent guarantee – Protects you against tenants who refuse to pay their rent. This policy will cover lost rent and may include cover for legal fees should you be forced to evict your tenants.

Other policies may also be offered. Check with your insurer to find out what additional cover they offer.

Is Landlord Insurance Necessary?

Many landlords refuse to purchase landlord insurance because they feel it’s an unnecessary expense, but that could not be further from the truth. Unless you have deep pockets, this type of insurance is a necessity.

No matter how well you vet your tenants or how responsible they are, accidents can and do happen. Landlord insurance may not be required, but it’s certainly recommended. If you have a buy-to-let mortgage, landlord insurance may be a requirement.

What if your tenant accidentally spills red wine on your carpet? What if they forget to lock the doors, and burglars trash the property? What if they accidentally leave the tap on and flood the home? There are numerous scenarios that could leave you, as the landlord, out of pocket without the right cover.

Even if your tenants are not malicious, it’s impossible to predict the future and avoid accidents. The best thing you can do is prepare for them. That’s exactly what landlord insurance does.

The experts at iInsure365 have more advice on landlord insurance.