What insurance do landlords need?

This article is provided by Simply Business

Landlord insurance is designed to protect you, your property and your tenants. Often required by mortgage lenders, it’s different from a conventional home insurance policy, which won’t cover you for rental activities. It’s also sometimes known as ‘landlord property insurance’.

Your landlord insurance policy will combine a number of specific covers, keeping you protected against the risks that come with everyday rental activities, residential and/or commercial tenants, and disasters such as a fire, or flood. We’ve set out the most popular covers for landlords below, along with some pointers for things to think about, when you’re building your own policy.

Landlord liability insurance

This cover can protect you against injury or damage claims related to your rental property. For example if a tenant tripped over some loose cabling and made a claim for injury, a landlord insurance policy that includes liability cover could help you pay any compensation or legal fees. It’s included as standard in most landlord insurance policies.

Compensation claims can be made by anyone who visits your property, from tenants and their visitors to tradespeople. Because of the variety, and because compensation payouts can include things like loss of income and medical bills, the cost of a claim can be very high.

Most insurers will offer cover levels in the millions, with the option to increase from a standard to higher level, if you need to. Commercial landlords may need specific levels of cover, depending on their circumstances, and you can confirm this with your local authority.

Landlord contents insurance

If the contents of your rental (household items such as furniture or fittings) are stolen, damaged or destroyed, landlord contents insurance can pay to have them repaired or replaced. You can usually buy this cover as part of a landlord insurance policy that includes other important protection, such as landlord liability insurance (covered above).

For example, if you were letting your rental as furnished or part-furnished and the carpet was damaged during a flood, landlord contents insurance could pay out to cover the replacement costs, apart from any excess (the part of the claim payment that you’re liable for). Your policy will clearly state any excesses in the quote and paperwork, and you’ll need to estimate the total replacement value of your contents as accurately as possible when you’re setting up the policy, to ensure you’re fully covered.

It’s important to note that this type of insurance wouldn’t cover you for gradual wear and tear of your items, or for your tenants’ belongings. They’d need to organise their own cover for these. If it’s not already covered by your landlord contents insurance, you may want to look at including accidental damage insurance for your rental, which would pay out to repair something like a red wine spillage on a sofa you’d provided for your tenants, or a smashed light fitting. We’ve gone into this in more detail below.

Accidental damage insurance

From spillages to a broken fruit bowl, accidents happen. Often they’re one-offs, and that’s where accidental damage insurance comes in. You’ll usually have the option to include this in your landlord insurance policy alongside covers like the ones mentioned in this article.

Like contents insurance above, it’s a popular cover for landlords who are letting their rental property furnished, or part-furnished. It won’t cover you for wear and tear over time, or for your tenants’ own belongings, but it can help to put right any accidents that damage items or furnishings you’ve supplied.

So that you’re fully covered for any claim you do need to make, make sure you estimate the total replacement value of your items and furnishings as accurately as possible, when setting up the policy.

Landlord buildings insurance

So your contents are covered, but what about the permanent, physical structure of your property? Landlord buildings insurance covers damage and destruction of parts such as the roof, walls and floors, if bad weather were to strike or your rental property was hit by vandals. It can also provide cover for damage caused by issues such as buildings subsidence.

Landlord buildings insurance isn’t a legal requirement, but most mortgage providers will insist that you have it in place. Just like with landlord contents insurance, your policy won’t cover anything owned by your tenants (for example, a laminate flooring they’ve fitted), so they’ll need to arrange their own cover here.

Every insurer and policy will be different (for example, some may cover a fitted kitchen as part of a buildings insurance policy), so make sure you check off what’s right for you when getting a quote. Some policies may even cover external structures, like garages and outbuildings.

This article is provided by Simply Business