What level of landlord insurance do I need?
Your amount of landlord buildings insurance should be based on the rebuild value of the property, while your landlord contents insurance is based on the contents’ replacement value. Most insurers offer standard cover limits for other insurance types like tenant default and legal expenses.
To decide how much landlord buildings insurance to take out, you need to estimate the rebuild value of your property. This is different from the market value: it’s how much it would cost to rebuild your property from scratch, including labour and materials. You can hire a surveyor if you’re not sure about this.
Your contents insurance amount should be based on what it would cost to replace all of the furniture, appliances and other items you provide to your tenants. This may include things like the fridge, television and sofa. Note that the amount doesn’t include things that belong to your tenants, as they need to insure these separately.
It’s important that you estimate these values as accurately as possible and get enough insurance, because otherwise you may not be covered if you come to make a claim. Your insurer can apply ‘average’ to your claim if they believe you’re underinsured, which means they can reduce the amount of money they pay to you in proportion to your shortfall in cover. For example if they believe you’re underinsured by 25%, they can reduce any claim payment by 25%.
In terms of property owners’ liability cover, Simply Business offers £2 million or £5 million of cover. Our tenant default insurance covers your rental income up to a maximum of £2,500 per month, and our legal expenses insurance comes with a standard cover limit of £50,000.