Landlord Insurance Explained

We want our customers to fully understand their insurance agreement so we have written a guide to landlord insurance. We take an in-depth look at the features and exclusions of a landlord policy, and offer tips and advice on how best to keep your property safe.

front doors to rented houses

What is landlord insurance?

Landlord insurance is designed for the protection for property owners who are renting to third parties. A tenant is a person or group who has a rental agreement in place allowing them to inhabit the property. The tenancy agreement is what holds you liable for your responsibilities as a landlord and requires you to have the correct insurance in place.

How is landlord insurance different in comparison to standard home insurance?

Although you may not operate officially as a business, if you are receiving money through rent then for insurance purposes this is how you are classified. While buildings insurance is standard with both, home insurance won’t cover you for the liability, legal and loss of rent options available on a landlord’s policy. Renting and not telling your home insurer could invalidate your home insurance so it makes sense to choose a landlord insurance policy and protect your earnings as well as your material assets.

What does landlord insurance cover?

How much should my property owners’ liability be? Limits usually are offered at 1m, 2m or 5m. Generally, it would be unlikely that a standard home would suffer a POL case for more than 1 million but some landlords might want to consider more.

Property owners’ liability – This is often the most misunderstood or overlooked by new landlords. Liability insurance for landlords is a type of public liability insurance that compensates loss, damage or injury to a third party and their property. The landlord is ultimately liable because it’s their responsibility to oversee that their property is adequately maintained. For example, if a third party trips on a loose slab in your driveway, you could be held liable in a compensation case.

Building insurance – The rebuild cost. This is one of the most important features for your property and vital you get it right. It exists to cover the costs for repairing damage right through to rebuilding – should it need it. You should insure yourself for the full re-build cost of your property. Being under insured (meaning you state the cost to rebuild your house as less than it is) will leave you vulnerable.

Condition of average clause – Most insurers have a ‘condition of average clause’. This means if you give a sum insured for building/contents which is not enough, they can reduce the claim by the percentage that you’re under insured. For example, if you insure for £100,000 (but it should be £200,000) and claim for £50,000, you could end up being able to claim only for £25,000.

Loss of rent – Indemnity period: should the property become uninhabitable the indemnity period is the length of time ‘loss of rent’ can be claimed for.

How long should my indemnity period be? – 12 months is the standard minimum and set as standard on most policies. Should you need to re-build, don’t underestimate the time it takes for demolition and debris clearance, architects and planning, and then rebuilding.

What does landlords’ contents insurance cover? - Your ‘contents’ insurance covers anything that is not fixed down as part of the structure of the property. This means furniture and decorations are contents but the walls, ceiling and kitchen cabinets come under buildings insurance. When renting a furnished property this becomes important and many policies offer a standard amount. Make sure you know what this level is and decide if you need to extend the amount.

Subsidence insurance – If your property has suffered from subsidence you will need to declare this during a quotation. It is vital that you do because otherwise further complications could be uninsured. You will need to provide proof this has been checked by a professional and although it will most likely raise your premium, a specialist insurer should not have a problem sourcing you a policy that provides adequate cover and will be able to consider each situation on a case by case basis.

Optional cover for landlord insurance

Accidental damage cover for landlords – This is not always offered as standard but all you need to do is make it clear during your quote that you want to include accidental damage. Accidental damage is considered damage to property not classed under another insurable peril, for example putting your foot through the loft floor; a nail through a pipe; or wine spilt on the carpet. This is specifically to cover accidental damage caused by you as the landlord. Accidental damage when caused by your tenant is usually covered by their deposit or even potentially their own insurance.

Legal cover – This is help with legal fees when taking someone to court for non-payment or equally when someone takes the landlord to court. Legal cover is not usually found as a standard policy feature but can be requested as an option add on to your policy. As with all option extras they are not deemed essential or legal requirements. An adviser can discuss with you the costs and levels you might be interested in.

Landlord insurance for tenant damage – Tenants are considered to be on your property with the permission of you as the landlord, which is why this cover is not a standard requirement, but if there was an incident where they caused malicious damage expressly with intent this option will keep you covered for the costs.

Emergency assistance – This is a unique cover provided by MARAS in partnership with Towergate, designed to cover you for emergency call-outs 24 hours a day. Covers plumbing, gas or electricity failure, security to windows or doors, roofing, hot water failure, vermin, central heating or boiler failure. Each have their own features and exclusions. Request the policy documents and discuss with an adviser.

Landlord insurance advice

front door to rented house

Landlord insurance for unoccupied property – Unoccupied properties are much more susceptible to break-ins, petty crime, squatting etc. This being so insurers generally exclude unoccupied properties from their policies as standard. If the property is temporarily unoccupied during a changeover of tenants or a renovation a certain amount of time (usually around 30 days) is allowed before you should convert your landlord insurance to an unoccupied property insurance policy.

Accidental damage – It is always advised you make yourself aware of the accidental damage exclusions of any policy you consider. They are generally in place to protect the insurer from claims that are ‘inevitable’, such as wear and tear or renovations, or they are insurable but not part of the standard policy, such as subsidence. Discussing these and other exclusions will help you understand your side of the insurance agreement such as levels of maintenance (plumbing, tree surgery) and what in turn you can expect your insurer to cover.

Money back – As with many commercial policies, you may not have a cooling-off period which will offer a free cancellation. Check this during the quotation to make sure you are fully aware of what your options are.

Tips for landlord insurance

You are classed as a business, therefore the more successful a businesses you run, with more experience, the lower the renewal premiums can go – similar to a no-claims on your car. Towergate can often offer a discount to landlords that have previous experience of letting out properties.

Landlord rent guarantees are not part of insurance but something offered by agencies to cover you if your tenant doesn't pay. This is different to loss of rent cover because to claim loss of rent, an insured peril like a fire must have caused damage which prevents your tenant from inhabiting the property.

Tenant referencing – Landlords are wise to properly vet their tenants to confirm their financial status and references. It makes good business sense to know who you are signing agreements with.

Landlord insurance for multiple properties

You will often be able to get a discount for insuring multiple properties. Premiums can get lower with some insurers and large discounts on admin fees. You can add newly purchased properties pro rata to existing policies allowing the policies on all properties to finish and renew at the same time. You'll need to speak with a specialist insurance provider but they'll often be able to find you a great deal by comparing quotes from a number of insurers.

Related policies

Landlord insurance

Commercial property insurance

Tenants contents

Unoccupied property insurance

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