If you’re a landlord, it’s essential to protect your property with insurance. Letting out property to tenants carries additional risks and responsibilities, which landlord insurance helps to cover.
Unfortunately, not all landlords have the right insurance. For example, many first-time landlords incorrectly believe that home buildings and contents insurance will adequately protect their property. However, renting a property for financial gain makes you a legal landlord — and standard home insurance rarely covers this activity.
Landlord insurance provides extra protection for you, your property, and tenants. As most buy-to-let mortgage lenders require you to have adequate property insurance, having the right policy is critical.
In this guide, you’ll see why landlord insurance is so important. Here we explain the key differences from home insurance, including:
- What home insurance covers
- What landlord insurance covers
- Why landlords might need contents insurance
- The cost of landlord insurance compared to home insurance
- Renters’ insurance for tenants
- Airbnb and holiday lets insurance
- Landlord legal requirements
The difference between landlord and home insurance
In a nutshell, home insurance only covers building and contents. Landlord insurance protects your building and contents, including policies needed to fulfil your business responsibilities:
|Property owners’ liability||
|Loss of rent||
|Damage caused by tenants||
What home insurance covers
Insurers design home buildings or contents policies to protect properties that the policyholder typically occupies. They will ask you to declare when the property is usually occupied during the day and night, and how many days the property is unoccupied each year (e.g., while you are on holiday).
The reason for this is simple: if you own a property and live in it, you are more likely to maintain and protect it. For instance, you can spot any problems, such as damp or flooding, when they arise. The longer a property is unoccupied, the more likely it is that theft or damage might occur. While you live there, you can make sure the property is in good order.
A typical home insurance policy covers:
- Buildings insurance:
- The cost of repairing structural damage to the property.
- Damage caused by fire, flooding, escape of water, storms, or earthquakes.
- Walls, roofing, windows, and permanent fixtures (such as fitted kitchens and bathrooms).
- Outbuildings, such as sheds or a garage.
- Contents insurance:
- The cost of replacing belongings that are not permanently fixed in the residence.
- Damage caused to these items by the same insured perils as buildings insurance.
- Furniture, white goods, clothes, jewellery, kitchenware, home entertainment equipment, and antiques.
- Optional cover for items used outside of the home, such as laptops and bicycles.
Accidental damage to buildings or contents can also be covered, usually at an additional cost. This insurance can protect against damage caused by drilling through a water pipe (buildings cover) or knocking over an antique vase (contents cover), for example.
Any claims you make for the above on a standard home buildings or contents policy are likely to be declined if you have tenants in your property.
Standard home insurance does not cover:
- Legal expenses, including tenant evictions.
- Claims of alleged injury incurred by tenants.
- Landlord contents insurance protects any contents you provide in a property (especially partly furnished or fully furnished homes).
- Loss of rental income due to a property becoming uninhabitable for an insured reason (e.g., a fire or flood).
- Costs of alternative accommodation if a property needs to be vacated while repairs take place.
What landlord insurance covers
Landlord insurance is specifically designed to cover the property you let out. This insurance can cover a range of residential properties, including flats, houses, and apartments.
In short, a landlord insurance policy can provide:
- Buildings cover – the same protection as standard home insurance, but for rental property. Some landlord policies also cover fitted carpets under buildings policies.
- Contents cover – for items you furnish a property with, including carpets, curtains, furniture, and electrical equipment.
- Property owners’ liability insurance – to defend claims of alleged injury incurred by tenants in your property.
- Loss of rent cover – to cover the rent if a property isn’t occupied for an extended period due to an insured peril.
- Alternative accommodation cover – if you need to provide temporary accommodation for a tenant while repairs occur on your property, this provides cover towards the costs.
- Cover for malicious damage to your property by tenants.
Many people will benefit from landlord insurance, including owners of:
- Buy-to-let property, purchased to provide an income to the property owner.
- Rooms rented out in your home.
- A property you previously resided in that you now let out.
- Inherited property that you decide to rent out rather than sell.
- Houses in multiple occupation (HMOs).
Your landlord insurance policy can also cover property housing a range of tenants, including:
Do landlords need content insurance?
Not all landlords need contents cover, but you could find it helpful if your buildings insurance does not protect carpets, for example. It is also useful if you let out a partly-furnished or fully-furnished property. Just make sure you have a complete inventory of items you wish to cover.
Is landlord insurance more expensive than home insurance?
Landlord insurance prices start at just £132.00 + IPT (insurance premium tax)* — making buy-to-let policies not much more expensive than standard home insurance. You may find it’s well worth a little extra money compared to home insurance, given the extra cover you get.
Landlord insurance costs can vary depending on several factors, including the cover selected, your property, and individual circumstances.
Find out more in our guide to explaining how much landlord insurance costs.
Do my tenants need renters’ insurance?
Your tenants will need to take out renters insurance cover for their possessions while they occupy your property. This is not covered under a landlords’ content policy.
This is a decision your tenants will need to make for themselves. There is no legal requirement to take out contents cover for tenants, but renters’ insurance provides flexible cover for this should your tenants require it.
What insurance do I need for holiday lets or Airbnb?
Renting out a property as a holiday let or through a platform like Airbnb, requires specialist insurance. Neither home insurance nor landlord insurance is acceptable, as the risks covered are different. There could be extended periods with no one inside the property.
Gallagher offers holiday let insurance, including cover for Airbnb rentals. Speak to us to find out more.
Is it a legal requirement to have landlord insurance?
It is not a legal requirement to have landlord insurance, but it could prove very costly if you don’t have the right cover.
Becoming a landlord comes with many responsibilities, including everything from adhering to fire safety regulations to gas and electrical safety checks. Making sure your property is adequately insured not only protects your investment, but can also help you with legal expenses and defending liability claims from tenants. Standard home insurance does not cover these risks.
Do I need landlord insurance if I rent out part of my own home?
If you live in a property and rent out rooms, you need landlord insurance. Insurers will always find this a riskier arrangement; what happens if items are stolen from your home by somebody who has full access to your property, for example?
Therefore, a claim under standard home insurance will likely be void in these circumstances — so you need landlord insurance to cover the risk.
Do I need separate landlords’ insurance to rent out a flat?
Buildings cover for flats is often provided for the block by the freeholder. You should always check with them that adequate cover is in place.
However, you may still require some elements of landlord insurance, such as legal protection, contents cover, or property owners’ liability protection. Mortgage lenders often still insist that there is at least adequate buildings insurance in place.
If buildings cover is not provided by the freeholder, you need insurance for damage to the property and the protection listed above. If you are the freeholder of the block, you can also get block of flats insurance.
Becoming a landlord
If you’re considering letting out one or multiple properties, you should familiarise yourself with a landlord’s responsibilities.
We’ve created some handy guides for landlords and all types of properties:
- Starter checklist for landlords
- Tenant reference checks
- Guide to renting out HMOs
- Tips for DSS Landlords
Buy landlord insurance
Gallagher are experts in property owners’ insurance, including landlord cover. We can search our panel of insurers for competitively priced insurance that provides the cover you need.
You can get a quote online in minutes, or request a call back from our expert team:
*as of April 2021