Landlord Insurance Explained - A Beginners Guide

Many landlords are under the false impression that a home or residential insurance will cover issues arising from tenants. What they fail to realise is that they need specialist landlords insurance to cover a rental property.

General buildings and contents insurance does not adequately cover you for third party damages, which is precisely the risk you incur as a landlord. Having insurance diminishes your exposure to these risks, and protects you from a heavy financial burden should such an accident occur.

What Landlord Liability Insurance Covers

There are a variety of risks that a landlord is exposed to by taking on tenants. Here are some examples of where insurance can protect your financial wherewithal.

Malicious Damage Caused by Tenants

The worst kind of property damage typically comes not from an accident, but intent to do harm. Generally speaking a landlords insurance plan will cover you for up to £25K against vandalism or malicious damaged caused by a tenant or their guests.

Tenant Default

In harsh economic times, a tenant may not be able to pay the rent on time. In other instances, a tenant may simply choose not to pay, or leave the property abruptly despite signing a long term lease. Landlords insurance will help attenuate the impact of such an occurrence.

Loss of Rent

If a fire or other accidental property damage results in a tenant being unable to occupy the space, you will lose a source of income that you may depend on. Some plans will even go as far as providing alternative housing for your tenants until the property is deemed habitable, with certain restrictions on length of stay. If the damage is less than £1000, generally the insurance company will pay for the cost of repair as opposed to providing cover or an alternative living space.

Landlord Liability

Some plans will offer cover for liability claims, where negligence on your part led to an injury or property damage for the tenant. The insurance would also cover you for legal expenses.

Accidental Damage and Acts of Terrorism

Any accidental damage or acts of terrorism involving a third party would be covered by landlords insurance.

Rules and Restrictions

Many policies will have set rules and restrictions regarding the benefits you will receive and whether you qualify for them. For instance, if your space becomes unoccupied due to one of the aforementioned circumstances, cover may be offered for 60 days before it is expected you find a new tenant. It is important to know the guidelines attached to your policy before you make your purchase. Check out this about ipcuk.

Additional Cover and Benefits

Landlords competing to find the best tenants will often provide a number of services free, such as satellite dishes, broadband, and Wi-Fi. Some insurance plans will include the cost of cover for these items standard so that you do not have to purchase additional insurance.

Others will provide discounts on cover for student lets, and will extend grace periods for cover when the building is a student residence. However, other insurers will charge higher rates for student lets, given the perceived risks involved with leasing to youth.

Risk Factors and Property Type

The cost of insurance generally depends on a wide variety of factors, from the tenant to the interior to the type of building. Most insurers will offer packages based on property type, whether it is a single flat, a commercial property, a shared house or a family home. The level of risk, for instance, for renting out a room in a family home is much lower than in a dormitory environment. Discussing the risks with your landlords insurance provider will help you better understand what you can do to lessen your exposure while at the same time lowering the cost of your premium.


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