If you’re a landlord, or thinking about becoming one, you may well have asked the question “Do I need landlord insurance?” It’s a valid concern, and the answer can greatly impact your peace of mind and financial security. Here we take a look at what landlord insurance covers, whether landlord insurance is necessary, and the most common insurance claims landlords make.

What is landlord insurance?

Landlord insurance protects landlords from the risks associated with their rental property. There are different types of landlord insurance. Most will offer buildings and contents insurance, and you can then choose from a range of additional cover that suits your individual needs.

Examples may include:

Property protection

This covers damage to the rental property which might be caused by hazards such as fire, vandalism, and natural disasters such as floods and storms.

Liability coverage

Landlord insurance often includes liability cover. If a tenant or one of their visitors becomes injured on your property and sues you, this cover will take care of legal expenses, medical bills and potential settlements, protecting your financial assets in the process.

Loss of rental income

If your rental property becomes uninhabitable due to a fire or storm, you may struggle to cover mortgage payments, property taxes and maintenance costs. Landlord insurance can provide compensation during such situations.

Theft and vandalism

If tenants leave your property in less than ideal conditions, landlord insurance can help cover losses resulting from theft, vandalism, negligence or intentional damage caused by tenants. This can be a crucial safety net for landlords facing costs to return their property to a lettable condition.

Legal fees

Dealing with tenant disputes, eviction proceedings and other legal matters can be both time consuming and expensive. Landlord insurance may include cover for the legal fees involved, helping you navigate these situations without draining your personal resources.

Do I need landlord insurance?

Legally, you do not have to have landlord insurance, although if you are financing through a buy to let mortgage, most lenders will insist that you take out a landlord insurance policy to protect your property. Remember, you need to get written permission from your mortgage lender before you go ahead with renting out your property, or risk the terms of your mortgage.

Do I need landlord insurance if live in the property?

If you live in the property and rent out a room to a tenant or lodger, you might be wondering, “do I need landlord insurance?” The answer is that yes, you will still need a specialist landlord insurance policy and you will have to declare to the insurance provider that you also live in the home.

A regular residential buildings and contents insurance policy will not be valid if you live in the property but also rent out part of it.

To ensure that your landlord insurance policy is valid, you will need to have a tenancy agreement in place. Part of this tenancy agreement should state how your tenant will be allowed the use of at least one room, which you as the landlord cannot enter without permission.

Do I need landlord insurance if I already have buildings and contents insurance?

A regular home buildings and contents insurance is not normally valid when you rent out a property. Usually, you will need to take out a specified landlord insurance policy, and this will include specialist buildings and contents insurance.

What issues are most claimed for by landlords?

The most common reasons for landlords to claim on their insurance in 2022 as compiled by Hamilton and Fraser Insurance include:

Escape of water – the most common reason for claiming on landlord insurance is due to leaking pipes, sinks, baths, showers or toilets.

Storm damage – with the increase in extreme weather in the UK, damage from storms is the second most common reason for landlords to claim on their insurance.

Accidental damage – whether it’s a broken window or a carpet stain, accidents will happen, but landlords are responsible for covering the cost. This is why accidental damage cover is so important.

Break-ins – whether attempted or forced, break-ins can cause a lot of damage, and are costly for landlords to fix.

Subsidence – hot summers followed by wet winters are making subsidence far more common, and one of the biggest reasons for landlords to make an insurance claim.

Will landlord insurance cover unpaid rent?

Some insurance companies will offer loss of rent options, but do be careful with the finer detail.

There will often be conditions or exclusions relating to this type of insurance. For example, tenants may need to be in arrears with their payments by a certain number of months, and you may only receive payments for a set period. In addition, you may be excluded from this type of insurance if you have had tenants who have defaulted on their rent in the past.

What’s the alternative to unpaid rent insurance?

If you’re wondering “do I need landlord insurance” and your main concern is ensuring your rental payments arrive on time every month, then you may want to consider getting guaranteed rent for landlords.

With a guaranteed rent scheme, you are paid every month for a set period, regardless of whether the tenants are paying their rent on time. Even if the property sits empty, you will still receive your rental payments.

Unlike landlord insurance, you won’t need to pay any excess or make a claim and risk losing your no claims bonus.

What’s more, a guaranteed rent scheme will take over the day to day running of your property, including finding new tenants, dealing with references, admin and legal paperwork. The City Borough Housing guaranteed rent scheme also includes everyday repairs, maintenance and inventory checks, as well as returning the property in its pre-let condition, allowing for fair wear and tear.

To find out more about the City Borough Housing guaranteed rent scheme and how it can save you time and money as a landlord, and to request your free valuation, please get in touch with our friendly team.