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Landlord Insurance

Forms of cover which some landlords have found worthwhile or essential include:

  • Property insurance will more than likely be a requirement of any buy-to-let mortgage. Cover should be for rental property specifically (relying on a standard household property without informing the insurance company that the property is let might negate the cover) and can include cover against fire, storm, theft, flood, accidental damage, malicious damage, terrorist attack, and subsidence.
  • Alternative accommodation: If a rental property becomes uninhabitable for some reason (say, flooding), it is the landlord’s duty to provide tenants with alternative accommodation. ‘Alternative accommodation’ cover will protect against the additional costs arising from this eventuality.
  • Unoccupied property insurance: most property insurance does not provide cover when buildings are left unoccupied for any length of time – say longer than three weeks. If this is a possibility, separate cover may need to be arranged. Restrictions are likely to apply.
  • Contents insurance: in this context, contents insurance covers landlord’s contents, including furniture, furnishings and appliances. Tenants generally have to insure their own possessions separately.
  • Loss of rent cover is intended to provide cover should a property remain empty for any length of time (void periods). The amount of cover will be restricted, the start date of payments probably delayed until the property has been empty for a period, and the number of weeks’ cover limited.
  • Rent guarantee: this is protection against tenant default. Generally it will not apply for one, two, or three months while, in order to claim, landlords will have to be able to show that they have obtained proper credit checks, taken up references, and confirmed the identity of tenants, and that they have done all that is reasonable to avoid loss of rent (issuing appropriate reminders and notices in good time).
  • Landlord’s legal liability: landlords are liable for tenant and third party injuries that can be linked to the condition of their property at the time. The possibility of a claim arising might be remote, but, if one should arise, the sum involved might well be substantial. Landlord’s legal liability provides cover, often to the extent of millions of pounds, for this risk.
  • Contents liability cover: similarly, substantial claims and liability can arise from faulty contents. Contents liability cover (which can be wrapped up in general landlord’s liability cover) will take care of this. Landlords should check restrictions and requirements including any maintenance records.
  • Legal expenses:this is often an optional extra in landlord insurance policies. If taken out, the cover is likely to be fixed at an annual maximum amount. Legal expenses cover can pay for pursuit of rent arrears, eviction of tenants, recovery of dilapidations, or claims against guarantors, as well as personal claims arising from renting – such as a claim for damages arising from injury.

As insurance companies have differing assessments of different risks, different policies towards different geographical areas and/or types of rental property and tenants, and different priorities, it will always pay to shop around. Before doing so landlords should consider the cover they believe to be essential and that which simply could be worth arranging if offered at a reasonable price. Packaged landlord insurance policies may include elements that, given the landlord’s circumstances, may not be required. There are also likely to be optional elements, some of which might be essential.  Packages may appear similar but in fact differ in various ways from company to company.

It is important, when arranging insurance, to make full disclosure of circumstances. This way the insurer can better assess the risk, and there is less likelihood of an argument with the insurance company should a claim arise.

Among the disclosures asked for are likely to be the type of property (age and suitability) and type of tenants. Landlords should be aware that some insurance companies will place restrictions on both (for example, no listed buildings, no houses in multiple occupation, no student tenants, no asylum seeker tenants, or no tenants reliant on local housing allowance). Other companies may specialise in one or the other – which is why it is important to shop around.

For the best Residential landlord insurance offers visit Residentiallandlord.com.




The Landlord's Handbook has everything you need to know about being a landlord – go to www.harriman-house.com/thelandlordshandbook to purchase your copy.




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