Do I Need Landlord Insurance for my Buy to Let Property?
Over the years of helping landlords manage their rental properties successfully, we often get asked the question… “Do I need landlord insurance for my buy to let property?”
Landlord insurance is not required by law and many landlords do go without cover. However, it is possible that it is apart of your mortgage agreement and for that reason many landlords still do need insurance.
Now that you know landlord insurance is not required by law, you’re probably asking yourself, why do I need landlord insurance in the first place and is it really worth the extra outgoings?
In this post you will learn exactly what landlord insurance is, what different type of covers are available to you and where to find the best insurance providers.
What is Landlord Insurance?
Before diving deep into the topic, it’s important that you have a good grasp of what landlord insurance is and what it could potentially do for you and your property.
Landlord insurance protects you as the landlord from risks that may arise from your rental property. Ideally, it cushions you from unexpected costs that can come as a result of disputes or damage to the contents of the property itself.
It’s easy for some people to ignore it since it isn’t required by the law. Some landlords actually don’t give too much thought into it, but it’s something that every landlord should consider.
You could be taking an awfully big risk without it. After all, since accidents can and will happen, you should also ask yourself what you would do if your property incurs damages and you didn’t have any insurance to cover the damages.
What Does Landlord Insurance Cover?
Chances are that you’re already familiar with the standard home insurance policy. While it can cover some aspects of your rental property, it is not always enough.
Landlord’s insurance cover, or buy-to-let insurance, goes beyond what a standard home insurance cover offers you.
It includes both building insurance and contents insurance, as well as various other types of insurance covers that you can consider for more peace of mind.
Below are some of the situations where landlord insurance can come in handy:
- Compensation claims – Ideal when a tenant is injured on your property
- Rent cover – Ideal in cases where tenants default their rent or have trouble paying up
- Landlord’s liability cover – Useful when a member of the public suffers an injury on your property
- Repairing damages – Whether the damages are incurred by a member of the public or even your property itself
It’s important to note that while landlord insurance can provide cover for most risks, you should still read all of its policies carefully since they vary a lot. The next step is determining which cover you need the most.
Which Landlord Insurance Do I Need?
This is a good question because when it comes to insurance there is no shortage of options to choose from.
It can be difficult to know which type of insurance you really need, and which you don’t. The type of insurance you get will mostly depend on your property and the tenants you have.
As such, let’s take a look at some of the options and find out which ones you should consider first.
- Building Insurance
- Landlord Contents Insurance
- Public Liability Insurance
- Home Emergency Cover
- Rent Guarantee Cover
- Legal Expenses
Do I Need Landlord Building Insurance?
This is the most basic type of landlord insurance available. It covers your building against any damages if there is any kind of disaster, like a fire, a flood, or a storm.
Building insurance ensures that the structure of the property, the walls, floors and roof are protected in case they sustain any damages.
In addition, the landlord building insurance covers your property against vandalism as long as it wasn’t caused by the tenant.
To protect yourself against damages caused by tenants, whether intentional or not, you will need a specific policy which you can discuss with your providers.
Do I Need Landlords Contents Insurance?
If you are renting out a furnished property, then it’s a good idea to get contents insurance. This will mean any furniture you provide will be covered against damages sustained during the tenancy.
This includes things such as carpets, curtains, sofas, beds, fridges, TVs, washing machines, and cookers.
All possessions you leave at the property listed in the letting agreement will be covered under this policy. This type of insurance is worth considering if you are renting out a furnished property.
Even unfurnished properties will usually contain things like carpets and curtains or kitchen appliances which are all covered under the landlord contents insurance.
To get started, consider creating a list of the items you’d like covered as well as their values. This will be helpful to your insurance provider whenever you want to get covered.
If you really don’t have anything of great value on the property, then perhaps a landlord contents insurance might not be ideal for you.
Public Liability Insurance
Liability insurance covers you against being sued for any accident involving injury or death occurring on your property.
For example, if the sink leaks and your tenant slips in the puddle and sustains a serious injury, they may try to sue you. If you are found to have been negligent in maintaining the property, you could be held responsible.
Such a case could result in thousands of pounds going to legal fees, and that could very well drain your bank accounts and leave you bankrupt.
This is why public liability insurance can be a good idea and is often a requirement if you provide student accommodation.
Home Emergency Cover
Home emergency cover will pay the cost of making any emergency repairs to your property. This includes the cost of any call out fees if you have an emergency like a gas leak or a burst water pipe.
It’s especially useful if you manage your own property because the tenant can call the insurance company themselves in case of an emergency. The insurance company provides you with contact details of local tradesmen, you just pass them onto your tenants.
This means you don’t get woken up at 3am to deal with tenant emergencies. If you use a letting agent, you wouldn’t have to worry about such, but you’ll still be at peace since the costs of any repairs are covered.
Rent Guarantee Cover
Under this policy, you are covered if your tenant is unable to pay their rent for any reason. It can give you a little extra peace of mind if you rely heavily on the rent to make the mortgage payments. However, most landlords can do without this insurance cover.
In most cases, landlords will simply evict their tenants if they stop paying rent. While evictions can sometimes be long and complicated, you can avoid such hassles by ensuring that your telling agent only lets your property to serious tenants.
It’s just a standard risk you take when you rent out your property. You can’t insure yourself against every possible eventuality because insurance costs money at the end of the day.
Besides, since you have the deposit, you can always demand a guarantor to try preventing any rent issues from occurring.
Legal Expenses Cover
The truth is that legal issues can come at any time and from any place. You could potentially find yourself in a dispute with a tenant, such as a forced eviction, or even from your letting agent.
In a case like this, you will need a solicitor. The only downside is that solicitors are expensive. And although it is rare that squatters try to claim your property, it does happen, and a legal expense cover would pay the legal fees.
Where to Find the Best Landlord Insurance
There are several insurance providers out there so it’s worth shopping around for the best deal.
To make things easier for you we have put together a list of some of the most reputable insurance providers in the UK.
There are also plenty of comparison sites that can help you to find the best deal in your area.
HomeLet
HomeLet is one of the insurance companies we use here at Keywest for rent protection and legal expenses.
As the UK’s largest tenant referencing and letting insurance specialists, HomeLet’s expertise is second to none since it provides reliable and affordable insurance services.
When you work with HomeLet, you can rest assured you’re working with a transparent organisation that operates with integrity.
Direct Line
This is an equally big company that most people have heard of already. They guarantee to beat the renewal price or quote of any other insurance provider when taking out your first policy with them.
It was voted as the most trusted landlord insurance provider at the Moneywise Customer Service Awards 2018.
Direct Line has landlord insurance policies available from £114 per year which is pretty affordable considering what other providers charge.
AXA
AXA offers property owners liability covers up to the value of £10 million and protection for up to 10 properties.
It has a wide range of optional extra covers to choose from so you can tailor your policy to match your needs. In addition, AXA offers landlord insurance covers from just £120 per year.
Churchill
We all know who Churchill is, or you at least recognise the dog from the adverts.
It offers a full range of insurance covers with optional extras including things like landlord boiler cover, loss of rent cover and multi-property cover.
You can even insure your property against acts of terrorism which may be rare, but better safe than sorry.
Discount Landlord
Discount Landlord offers insurance premiums specifically designed for landlords in the UK. You can get a quote in less than 60 seconds and they have a ‘call back’ option on their website in case you don’t have time to wait around.
Competitive prices are guaranteed, and they offer generous multi-policy discounts for landlords with larger portfolios.
Simple Landlords
Property Wire Awards ‘Best Landlord Insurance Provider’s winners two years running, Simple Landlords specialise in providing landlord insurance.
It claims to offer no-nonsense, award winning insurance at the best prices on the market. Quality cover is available from as little as £112.67 per year and landlords rated them 4.5 out of 5 stars.
Money Super Market
Comparison websites have a bad reputation for not actually finding you the very best deal, as they claim to do so. This is especially true for landlord insurance.
However, they do save you a lot of time searching around and repeatedly answering the same questions whilst shopping for the best deal.
Money Super Market has recently joined forces with landlord insurance specialist providers CIA to help you get the best deal.
