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Managing a rental property essentially means you’re running a business. This means that, as a landlord, you have many more risks to consider than a regular home owner, and standard home insurance might not cut it. We explain how landlord insurance works, why it’s a must-have if you’re thinking of going into the rental business, and how to get the right cover at the right price.

What is landlord insurance?

Landlord insurance is a type of home insurance specifically designed for rental properties. It covers many of the same things as regular home insurance, but typically with a few extras included that landlords might find particularly valuable. It is also sometimes known as rental insurance, property rental insurance, or buy-to-let insurance.

What types of landlord insurance are there?

The two main types of landlord insurance are the same as for home insurance. You can buy them separately or, if you need both, it’s often cheaper to buy them as a combined policy.

Landlord buildings insurance

This covers repairs to the structure of your property following damage caused by an event covered under the insurance policy. This usually includes subsidence, fire, flood, storm and water damage, and theft (unlikely as it may seem that anyone would try and steal part of a building’s structure, there have been cases of criminals stealing lead from guttering, piping or rooves, for example). Some policies also include accidental damage by your tenants; with others it’s an optional add-on.

Think of buildings insurance as covering anything that would stay in place (more or less) if you turned your property upside down and shook it. So as well as damage to the walls, floors and windows, for example, a fitted kitchen would be covered. However a freestanding oven probably wouldn’t be. There are some things that don’t quite fit in this definition – such as a TV that’s attached to the wall. And, for some reason, carpets seem a bit of a grey area as to whether they count as buildings or contents. So it’s worth double checking precisely what is and isn’t covered.

As a landlord, you’ll usually need buildings insurance unless your rental property is in block of leasehold flats, in which case the freeholder is likely to be responsible for buildings insurance. It doesn’t hurt to double check, though.

Landlord contents insurance

If you’re letting out a furnished flat, landlord contents insurance covers any items you own that don’t comprise part of the structure. Think sofas, tables, beds and freestanding kitchen equipment and utensils. Contents insurance covers the same types of risk as buildings insurance. Again, accidental damage by your tenants may or may not be covered as standard, so if this is important to you, double check.

A key distinction between landlord contents insurance and regular contents insurance is that the landlord version won’t cover anything owned and brought into the home by your tenant, such as clothes, audio equipment, jewellery or food. If your tenants want protection for their belongings, they’ll need to buy their own separate contents insurance.

What are my landlord insurance options?

So you’ve got buildings insurance, and contents insurance. So far so straightforward. But landlord insurance isn’t quite as simple as insuring the building and/or the contents of a property. As someone operating a commercial business, you have multiple other factors to consider. Chances are, if there’s a risk of financial loss, there will be a type of landlord insurance to cover it.

Some policies may include some of the below as standard. Others will give you the option to bolt them on for an additional premium. In some cases, you may also be able to buy them as standalone policies.

• Accidental damage. You might assume that if a tenant spilled red wine over your sofa, or managed to put a dent in your wall, that this would be included as standard with a contents or buildings policy. But while some insurers include it as standard, others charge extra. So always check the small print.
• Rental income protection. If your flat can’t be lived in while repairs are carried out following flood, fire or other major damage, this insurance covers your lost rental income. Some policies also cover any additional costs you incur to arrange alternative accommodation for your tenants.
• Rent guarantee insurance. This can offer financial protection f your tenants can’t (or won’t) pay their rent while still living in your property.
• Unoccupied property cover. Standard landlord insurance usually requires that a property isn’t left vacant for more than a month or two at a time. This type of cover ensures your property remains insured if it is unoccupied for longer period between tenants. If you need to have renovations done, or own a holiday let that is rarely occupied in the off-season, for example. It’s not usually designed to cover loss of rental income.
• Property owners’ liability (public liability) insurance. This covers you for any legal expenses you incur if a tenant or another party takes action against you after they’re harmed, or their belongings are damaged, at your property.
• Landlord emergency cover. As with regular home emergency cover, this covers the immediate cost of dealing with emergencies such as burst pipes or boilers on the blink.
• Legal expenses cover. This can help you recover any legal costs for dealing with things like chasing unpaid rent, evicting a tenant, or personal injury claims.
• Employer’s liability insurance. If you employ anyone at your property – a cleaner or gardener, for example – this covers any costs you incur if they become ill or are injured because of their work for you. It’s usually a legal requirement if you use any employees at rental properties.

How to compare landlord insurance

Landlord insurance may seem complex and confusing. Break it down into steps to help make the process less daunting.

1. Decide what risks you want to cover. Do you just want basic cover to insure your buildings (and any contents if your property is furnished) against damage or theft, or do you also want to protect yourself against the risk of losing rental income, or your liabilities if a tenant is injured in your property?
2. Calculate what levels of cover you need for your rental property. Calculate the worst-case scenario costs of setting things right – if your property was destroyed in a fire, for example. Get an up-to-date valuation for the rebuild costs, and tot up the value of your belongings. There are online calculators that can help with the latter.
3. Compare quotes for the cover you need. Several price comparison sites let you compare landlord insurance, but be aware that many of them partner with specialist business insurance broker Simply Business. So if you want to get a range of quotes, as we would always recommend, you will also need to go directly to a few landlord insurance providers. These include mainstream insurers, such as Aviva and Direct Line, as well as several specialist landlord insurance brokers.
4. Compare the cost of bundled vs standalone policies. When reviewing policies, make sure you’re comparing like with like. Some policies may include features as standard that others offer as an optional extra. Often, you’ll save money by buying all the cover you need from a single provider. But there may be occasions when it’s worth splitting out certain elements of cover – if the home emergency insurance offered through your chosen policy doesn’t cover everything you want it to, for example.
5. Read the small print. Don’t wait until it’s time to make a claim to check policy documents. Read the terms and conditions of shortlisted insurers (or at very least the summary) before you buy a policy. You don’t want to allow your tenants to bring their pet, only to discover too late that pet damage isn’t covered, for example.

What affects the cost of landlord insurance?

There is no blanket answer to the question of how much you can expect to pay for cover. The cost of landlord insurance is influenced by a number of factors, including:

• Where the property is located. This can affect the likelihood of you needing to make a claim. For example, you may live in a high-crime area where there is an increased risk of burglary, or an area where the cost of property repairs is high.
• The type of property. The size of the house will affect the cost of cover. Fairly obviously, a four-bedroom house will typically cost more to insure than a two-bedroom apartment in the same area.
• The site itself. Other unique factors about your property will also be taken into account. For example, if it’s located in a flood-prone area or surrounded by tall trees, your premiums could be higher.
• The value of your building and contents. How much would it cost to rebuild your property and to replace all the contents that you (rather than the tenants) own? The higher this figure is, the higher your landlord insurance premiums will be.
• How secure your property is. Does the property have any security features to deter thieves, such as a state-of-the-art alarm system? If so, this could lower your premiums.
• The age and construction of your property. The insurer will consider how old your property is and the materials used in its construction when determining how likely it is to withstand damage, and how much that damage will cost to repair or replace.
• Your claims history. If you’ve previously made multiple claims on a landlord insurance policy, you can probably expect an increase in the cost of cover in the future.
• How many optional extras you include. If you bolt on a selection of the landlord insurance options outlined above, you can expect to pay more.

How can I save money on my landlord insurance?

• Up the excess. As with any insurance, opting for a higher voluntary excess can reduce your premiums. Just be aware that you’ll need to pay more in the event of a claim.
• Boost your security. Your insurer is likely to look favourably on a burglar alarm and good-quality locks.
• Be picky with the tenants you’ll accept. Some tenants, such as students, are deemed riskier than others by insurers.
• Avoid unoccupied periods. As standard, insurers won’t insure properties that are unoccupied for 30 (or in some cases 60) days. If your property is empty for longer than this, you may need to pay extra for unoccupied property insurance.
• Get an accurate rebuild value. This may not save you money in the short term. But if disasters strikes and your property needs rebuilding from scratch, you’ll be grateful not to have to pay for any shortfall out of pocket.
• Bundle up. If you want add-ons such as rental protection, liability insurance or landlord emergency cover, it’s often cheaper to combine them into a single policy rather than buying them separately.
• Compare policies. As with any type of insurance, the cost of landlord insurance will also vary by insurance provider and its appetite for the particular risk that your situation poses. So shopping around and comparing policies is as crucial for landlord insurance as any other kind of insurance.

What does landlord insurance cover?

As standard, you can expect landlord buildings and contents insurance to cover your property and your own belongings for subsidence; fire damage; flood, storm and water damage; theft. Some policies may also include accidental damage.

Some insurers may also include some elements of liability or rental protection as standard. With others, these may be an optional extra.

What doesn’t landlord insurance cover?

When you compare the best landlord insurance policies, take a look at the list of exclusions. These are situations and events which the insurer may not cover, such as:

Is landlord insurance worth it?

There are a lot of costs to consider when buying and managing an investment property. The thought of shelling out even more for landlord insurance may make your heart sink. But there are several reasons why it’s worthwhile:

• It protects you against risks typically faced by landlords. As a landlord, you’re exposed to a range of risks that don’t affect ordinary homeowners. The best landlord insurance provides the financial protection you need to look after your investment property.
• It provides peace of mind. In some cases, the security deposit won’t be enough to cover you for tenant-related losses. Landlord insurance is designed to guarantee that you won’t be left out-of-pocket if something goes wrong with your property.
• Cover is available for short-term rentals. Landlord insurance doesn’t just cover long-term tenancies; there are also policies available to cover short-term rental arrangements, such as renting out your property through websites such as Airbnb.
• It could be a requirement of your mortgage. If you have a buy-to-let mortgage, your lender might require you to have landlord insurance in order to qualify for the loan.

Pros and cons of landlord insurance

Frequently asked questions

• Is landlord insurance the same as home insurance?

  Not exactly. The two components that make up most home insurance policies – buildings and contents insurance – are certainly key parts of most landlord insurance. But landlord insurance is a term used to describe a wider set of policies that can also cover the loss of rental income, legal expenses incurred as a landlord, or your liability if a tenant is injured as a result of living in your property.

• Is landlord insurance compulsory?

  No, there is no legal obligation you to take out landlord insurance. However, some mortgage lenders require landlords to take out a policy before approving loan applications.

• Do policies cover me against damage caused by tenants' pets?

  It depends on the policy – some do, some don’t, and for some it’s an optional extra. If you want to give your tenants the flexibility to bring their pets with them, make sure you choose a policy (or an add-on) that covers pet damage.

• When should I take out landlord insurance?

  Don’t wait until you experience a problem with a tenant to think about purchasing cover. The best time to buy a policy is immediately after you settle on your investment property.

• Does landlord insurance cover legal costs if I take a tenant to court?

  It depends on the policy; not all insurers cover legal costs. Read the terms and condition of your policy closely for full details on what your policy does and does not cover.

• Do insurers ask what kind of tenants I'll have?

  Yes. In most cases, you’ll be asked what kind of tenant you plan to rent to during the application process. For example, an insurer might want to know if you’ll typically be renting to students, professionals, or retirees. Who you rent to affects how much you pay for your landlord insurance. If you rent to socially-active students or those receiving housing benefit, you’ll pay more.

• Can I insure multiple properties under one landlord insurance policy?

  Yes. If you own more than one rental property, many insurers will let you insure them all under a “multiple property” landlord policy. Some insurers will even let you insure a mix of residential and commercial properties under one policy.

Written by

Ceri Stanaway

Writer

Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes. See full bio

Co-written by

Danny Butler

Publisher

Danny is a publisher at Finder specialising in insurance and investing. He previously worked at the global insurer Aon and has appeared in national media giving advice on insurance. Danny holds a BA in International Business from the University of Plymouth and has undying loyalty to his average-poor football team, Portsmouth FC. See full bio

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