Understanding landlord insurance

understanding landlord insurance

This probably won’t be most entertaining thing you’ll see on the internet today. But since you’re here, it’s a safe bet that you need to know a little more about what sort of insurance you’ll need as a landlord. If that’s not true – and you were actually looking for amusing cat pictures – leave now, or risk bitter disappointment.

Still here? Then let’s crack on.

This guide will cover:

This is intended to be used as a guide only. Most of the information in this guide was sourced from www.gov.uk, where other sources were used – we have provided a link. Not that we’d ever give you false or unreliable information – that’s not our style.


Building’s Insurance

What will the policy usually cover?

Every provider has different terms about what is covered, so you should always check the policy carefully before you buy. That being said, here’s a brief overview of the sort of things you should expect to find covered:

  • Disaster damage: your fires, floods, explosions, earthquakes, landslides, lightening, and so on
  • Vandalism/break-ins
  • Water & oil leaks, burst pipes, and other issues of a leaky nature
  • Malicious (i.e. intentional) damage by your tenant(s)

You should also see if your policy covers additional costs incurred as a result of any of this damage, for example:

  • Damage caused by locating and/or accessing oil or water leaks
  • Relocating tenants while damage is repaired
  • Loss of rent due to the tenant(s) having to move out as a result of damage
  • Having to rebuild the property – in part of in full – due to damage (be aware, the maximum pay-out for this is usually significantly less than the full property value)

Take note:

The maximum amount your insurance provider will pay out for any of these issues will depend on the policy in question, and the size of the excess the policy has. Again, always check your policy and its conditions very carefully before you buy.

Top tip:

Where your insurance will only cover you up to a certain limit, it is a good idea to note this in your tenancy agreement. For example: suppose you had to pay for re-locating your tenant while damage was fixed (and your insurance policy’s upper limit were £50,000) then you should list this as a term of your tenancy agreement.

What won’t the policy usually cover?

Usually:

  • Damage to external features like: hedges, fences, pergolas, awnings etc.
  • Any damage caused by illegal use of the property (for instance, if your tenant(s) damaged the property when installing drug making equipment)
  • Damage to any outbuildings (e.g. garages) caused by frost or other extreme weather conditions
  • Damage caused by ‘exposed’ water tanks, or pipes that haven’t been lagged (lagging is that padded-insulating-cover-thingy – in case you’re not a plumbing/insulation aficionado, like we are)

Never:

  • General ‘wear & tear’ (i.e. damage that naturally occurs over time, e.g. damp or rot)


Contents Insurance

This covers damage to – or theft of – any of the property’s contents (shocker) which you, as the landlord, have provided.

What will the policy usually cover?

Pretty much anything removable which you – as the landlord – have provided:

  • White goods
  • Curtains and carpets
  • Lamps and pillows etc.

Top tip:

If you want to lower the cost of the policy, you can often opt for what’s called ‘indemnity insurance’. This will replace ‘like for like’ rather than ‘new for old’. For example: if your 5 year old fridge complete with whirring noise needs to be replaced, you will receive a 5 year old fridge complete with whirring noise (or the estimated value of that item).

What won’t the policy usually cover?

  • The policy may not cover replacement of locks if the keys are stolen
  • Damage to – or theft of – contents which were in a garden or outbuildings (e.g. tools in a garden shed)
  • Damage to – or theft of – contents which were left in any communal areas of the property (e.g. bikes in stairwells)

Take note:

It’s not your responsibility to cover any of the contents which the tenant brings with them. If they want this covered from damage or theft, they will have to take out their own policy.

Top tip:

Remember, landlord insurance costs can be deducted from your total taxable income as expenses.


Accidental Damage Cover

Usually not included as standard in most policies. Doesn’t require too much explanation, but it’s important to remember that while this does cover ‘accidents’, it doesn’t just cover anything.

For instance, if the provider deems that the damage was a result of negligence or recklessness, they may refuse the claim.

Take note:

For some strange reason, ‘malicious damage’ caused by a tenant is usually listed under ‘accidental damage’. Like ‘Mum, I broke a window accidentally on purpose’.

For example:

  • Contents: If you drop a can of paint on your new carpet (contents)
  • Buildings: Or you stick the end of your ladder through a window… Rodney


 

Property Owners’ Liability Insurance

If someone is injured – or their possessions are damaged – while on your property, then you would need property owners’ liability insurance to cover the costs. Unless you fancy footing the bill yourself!

The policy should cover any legal fees and/or damages which you incur as a result of the incident. You may find that your provider includes liability insurance as standard when you buy contents and buildings insurance – but it’s not necessarily the case, so do find out.


 

Legal Expenses & Rent Guarantee

These are usually sold together, but not always. The legal expenses part is to cover any court costs should you have to take legal action against a tenant(s). The rent guarantee is to cover unpaid rent.

Legal expenses

Should you need to take a tenant to court because they have breached their tenancy agreement, this will cover your legal bills.

Should that ever happen, you might also want your policy to cover you for:

  • Legal costs of evicting squatters (as in, people who start living in your property unannounced, as opposed to gym bunnies)
  • A brief ‘grace period’ of payments – for once you’ve gained repossession of the property and are finding a new tenant

Rent guarantee

This is to cover you for any unpaid rent (i.e. if your tenant is in arrears) and possibly if you have lost out on rent because the property has become uninhabitable (due to serious damage).

Return to knowledge hub