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The ultimate guide to landlord insurance

4-minute read

Jade Wimbledon

8 August 2016

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If you have any questions about landlord insurance you’ve come to the right place.

We’ve put together the ultimate guide to landlord insurance, covering some of the queries we get most regularly.

Read on to find out about the main types of buy-to-let insurance and to get the lowdown on requirements, cover levels, cost and more.

What type of landlord cover do I need?

Most landlord insurance policies include at least buildings insurance and property owners’ liability insurance. You can then choose to add other landlord insurance covers to your policy, like landlords’ contents insurance, accidental damage and tenant default cover.

You’re not legally required to have landlord insurance, but your mortgage provider will usually require you to have an adequate buildings insurance policy, and if you own a leasehold policy then your lease is likely to contain certain insurance requirements too.

Here’s a summary of what the main types of landlord insurance cover.

Landlords’ buildings insurance

Landlords’ buildings insurance covers the cost of repairing or rebuilding your rental property if it’s damaged by something like fire, flood or vandalism.

If you own a flat and the freeholder is responsible for buying the buildings insurance, you can choose to get cover for your fixtures and fittings instead.

Landlords’ contents insurance

You can add landlords’ contents insurance to your policy if you want to cover furniture, appliances and decorative items. Bear in mind that this will only cover your possessions: your tenants need to take out their own contents insurance to cover anything that belongs to them.

Landlord contents insurance can pay for repair or replacement if your contents are stolen, or if they’re damaged by something like fire or flood. If you also want to protect them in the case of accidental damage, you’ll usually need to add accidental damage cover to your policy.

Property owners’ liability insurance

Property owners’ liability insurance is designed to protect you against compensation claims made by a tenant or visitor for injury or damage that’s blamed on your property. For example, if someone tripped on a loose floor tile in your house and suffered a serious injury, your property owners’ liability insurance could cover the legal fees and compensation payout.

Accidental damage insurance

Accidental damage insurance can pay to repair your building or replace your contents if an accident happens, like a red wine spillage on your carpet or a hole in the wall because DIY has gone wrong.

If you buy landlords’ buildings insurance then you can add accidental damage cover for buildings, and if you buy landlords’ contents insurance you can add accidental damage cover for contents.

Legal expenses insurance can cover legal action that you need to take in relation to your rental property, for example to pursue unpaid rent or to evict your tenants.

Legal expenses insurance from Simply Business also includes legal document templates, UK tax and legal guidance and tax protection.

Tenant default cover

Tenant default insurance can protect your rental income if your tenants don’t pay their rent for at least two consecutive months. It can cover your lost rental income up to a maximum of £2,500 for up to eight months.

Landlord insurance isn’t a legal requirement, but bear in mind that buildings insurance is a requirement of most mortgage lenders and many leasehold agreements.

It’s important to understand that a conventional home insurance policy is usually not valid if you’re renting out your property, so you’re likely to need dedicated landlord insurance.

What level of landlord cover do I need?

Insurance like buildings and contents insurance needs to be based on rebuild or replacement values, while other insurance has set maximum cover levels.

Cover levels for landlords’ buildings and contents insurance

The amount of landlords’ building insurance you take out should be based on the rebuild value of your property. This amount is different from the market value: it’s the cost of rebuilding your property from scratch, including labour and materials. If you’re struggling to accurately estimate this, you can hire a surveyor to help.

You should base the amount of landlords’ contents insurance you take out on the cost of replacing all of your contents. This includes the furniture and appliances that you provide to your tenants like the fridge, television and sofa.

It’s important that you estimate these values as accurately as possible so that you’re covered if you need to make a claim. If your provider believes you’ve undervalued your property and you’re underinsured, they can apply ‘average’ to your claim. This means they can reduce the payout in proportion, so if they think you’ve valued your property at 25% less than the actual value, they can reduce your claim by 25%.

Cover levels for other types of landlord insurance

Simply Business offers £2 million or £5 million of property liability cover. It’s up to you to choose your cover limit depending on the level of claims you think you could face.

Simply Business tenant default insurance covers your rental income up to a maximum of £2,500 per month, while our legal expenses insurance has a standard cover limit of £50,000.

How much does landlord insurance cost?

The best way to find out how much your landlord insurance will cost is to run a quick quote.

The price of landlord insurance depends on the types of cover and the cover levels you pick, as well as details specific to your property like its location, age and the type of tenants living there. Things like the security measures you’ve got in place could also make a difference to the cost of your policy.

As with all types of insurance, when insurers calculate your premium they will consider the likelihood of you making a claim and the possible cost of any claim.

When you’re buying your landlord insurance it’s important to answer all questions accurately, as otherwise you may not be covered if you come to make a claim.

Other top landlord tips

Our Knowledge centre is the ultimate place for landlord tips, guides and articles. Check out our guide to the UK’s best buy-to-let areas for 2018 and our summary of the changes that have hit the buy-to-let market so far this year.

Do you have any questions about landlord insurance that we haven't answered here? Let us know in the comments and we'll answer them.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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