Landlord Insurance: Is Landlord Insurance Worth Having In The UK

Even though it is not legally required, landlord insurance can provide many benefits to residential rental property owners in the United Kingdom.

This type of coverage can assist landlords in covering the costs of repairing damage to their properties caused by tenants and natural disasters. It may also cover financial losses if the property has become unfit for human habitation. Landlord insurance can also assist rental property owners in covering medical expenses if someone is injured on the property’s premises.

However, navigating landlord insurance policies and procedures can be difficult; this guide will help you through it.

Landlord insurance definition

Landlord insurance protects you if you rent out your home on a regular basis to others. It considers the risks of owning a rental property, including the need to protect your rental income. Depending on the type of property you own, your landlord insurance policy may include a variety of coverage options or endorsements.

Examples of Landlord Insurance include:

• Protection for the structure and any additional structures against specified named perils.
• Personal items used to maintain the property kept on site are covered.
• Rental income security
• Landlord’s Liability

If you don’t have landlord insurance, you’ll be responsible for property repairs if your tenants (or their guests) cause damage. While you can reduce the chances of this happening by putting prospective tenants through a thorough screening process, it’s not just bad tenants who cause problems.

Accidents do occur.

And if a renter is injured while on your property, you could face liability claims worth hundreds of thousands of dollars. Then there’s the possibility that your tenant will fall behind on their rent payments.

Most tenants are honest people who pay their rent on time every month, but even the most honest people face difficulties, particularly during economic downturns. You could be relying on their rent as a source of income or using it to cover your borrowing costs.

You may like to read: Income Protection Insurance Is It Worth It In 2023

Why landlord insurance is important

There is no legal requirement for you to have landlord insurance, but most buy-to-let mortgages include it as a requirement.

Being a landlord entails risks you do not face when living in your home. Consider this: if one of your tenants is injured, you may face a legal claim, and if you are sued, your home insurance may not cover you.

In addition, if a tenant is unable to remain in the property due to an insured event, such as a fire or flood, a landlord’s policy may cover the cost of rehousing. It may even include coverage for rent losses when your tenants cannot live on the property. Landlord insurance reflects your responsibilities and protects you from the risks that come with being a landlord.

Landlord Insurance Coverage

A good, all-inclusive landlord insurance policy will include three key safeguards:

Property Damage: This is covered in the case of a natural disaster, fire, electric/gas malfunction, earthquake, vandalism, or irresponsible tenants causing damage to the real estate or furnishings. If at all possible, try to obtain a policy that provides replacement cost rather than actual cash value (especially if fixtures and furnishings are old) or a predetermined lump sum of cash.

Lost Rental Income/Rental Default Insurance: If your property becomes completely uninhabitable (due to severe mould, termites, a rat infestation, or a sinkhole), this feature provides temporary rental reimbursement to cover the rent money you’d otherwise receive if tenants could occupy the property.

Liability Protection: This is coverage for any medical or legal costs that may arise if a tenant or visitor is injured as a result of a property maintenance issue (such as icy walkways, architectural collapse, or an out-of-control hive of bees).

Landlord insurance can also cover a variety of other options, such as:

• Rental income loss
• Accidental or intentional damage or theft
• Legal fees and costs
• Liability of property owners
• Costs of eviction
• Coverage for rehousing tenants if the property is uninhabitable.

Landlord insurance price

The cost is determined by the level of coverage you choose, which is unique to your situation as a landlord. A good insurance company or broker will be able to advise you on your options.

Some of it may be dependent on your tenants – most insurers will want to know about them, particularly their employment status, to determine how likely they are to default on payments.

There are ways to reduce your premiums, just like with any other insurance policy.

In the event of a claim, accurately estimating the property’s rebuild cost can help you avoid paying too much and a higher voluntary excess. If the property is unfurnished, no contents insurance is required because the tenants will cover their own belongings if they so desire.

While insurers may favour homes with extra security (alarms, extra locks, etc.), the situation is slightly more complicated when it comes to rental property. Incorporating this into a landlord’s insurance policy would rely on the tenants taking responsibility for the security measures, such as making sure the alarm is turned on, and if this was not done, the policy could be voided.

Landlords insurance claims

On the other hand, having landlord insurance is insufficient to make a claim. Rental property owners must also do their part to reduce risks. Here are some of the steps that landlords must take in order to be eligible for claims.

• Choose your tenants carefully and ask for references.
• Bonds and rent should be collected in advance.
• Property inspections should be completed at least twice a year.
• When rent is 14 days late, send letters to tenants.
• At 21 days in arrears, file an application with the Tenancy Tribunal for “vacant possession,” which means the tenants are ordered to vacate the property.

The top 5 landlord insurance providers in the UK

#1. Aviva Home Insurance

Aviva Home Insurance provides Defaqto 5 Star-rated home insurance to over 577,000* customers.

Why should you choose Aviva?

If you need to make a new claim, you can do so right away online; they’ve made it quick and simple. If you need to contact them, you can do so at any time of day or night. In addition, they settled 90% of all home insurance claims in 2020, which amounted to over 87,000 claims.

#2. Age Co

• Home Insurance for People Over 50
• There are no hidden costs.
• Call centres in the United Kingdom
• ‘New’ cover for ‘Old’ cover
• Service that has won awards
• 24-hour legal assistance
• Age Co over 50s Home Insurance provides both buildings and contents insurance, which can be purchased separately or as part of a package.
• Profits are donated to Age UK.

#3. Admiral

Home Combined Insurance: If you want cheap home insurance, get a quote from Admiral – you could pay as little as £113 to insure your home.

Home Buildings: If you’re looking for cheap building insurance, get a quote from Admiral – you could pay as little as £103.

#4. More Than

• More Than Home Insurance has been providing quality coverage since 2001, with 8 out of 10 customers renewing their coverage.
• Call centres in the United Kingdom are available to assist.
• There are two levels of coverage available: primary and upgraded.
• As standard, buildings coverage of up to £1 million and contents coverage of up to £100,000 are provided.
• You’ll get up to £200 in home emergency assistance as standard. More than one authorized tradesperson must be used. Home emergency assistance is not available for the first 7 days after purchasing the policy.
• If your home becomes uninhabitable as a result of a valid claim, you will be provided with alternative accommodation as standard.

#5. Policy Expert

• Prices are set for the next two years.
• The UK’s leading provider of home insurance rates
• There are three levels of coverage: Essential, Premier, and Midas.
• The plain English campaign has approved the policy wording.
• Over 700,000 customers have put their trust in us.
• Switching saves money for 91 per cent of customers.
• All policies operate on the “new for old” principle.

Also, read about Sainsbury’s Home Insurance | What Does it Cover?

Is landlord insurance worth having

While it is true that this insurance will cost you extra money each month – money you may not be willing to pay out of pocket—you must also keep in mind that disagreements and problems between landlords and tenants are fairly common.

While there are many lovely people who make excellent tenants, there are also some who are disrespectful and will cause problems, and you should have a safety net in place in case something does go wrong.

Furthermore, your insurance premium may be tax-deductible, so you may be able to get your money back. You will be able to get a larger tax return if you are diligent about keeping receipts and turning them over to your accountant.

If you decide to get landlord’s insurance, keep in mind that not all policies are the same, so pay attention to the details and differences between them. Some policies will cover everything, while others may require you to purchase additional content or home insurance.

Conclusion

Landlord insurance is worth it if you rent out your home. Notify your insurance company if you use your home for anything other than a primary residence for you and your family. If you don’t, you might not get paid if you file a claim. Always discuss your situation with a licensed insurance agent or broker to better understand your required coverages and options.

FAQs about landlord insurance