At Think Plutus, we are frequently asked about landlord insurance from clients in the buy-to-let market who wish to get the right protection for the property or properties they rent out.
If you’re looking into landlord insurance, once of the first things you’ll notice is the sheer volume of options out there. This is why it’s good to speak to an insurance expert who can provide input and specialist knowledge of the investment property world. Think Plutus can point you in the direction of the best deals to suit your unique circumstances and needs, as well as helping you identify some innovative features that may not have even occurred to you.
Our advisers are well placed to give you the help you need, with whole-of-market access and detailed knowledge of the types of product available. We understand how different products and features are beneficial to different types of landlord – whether you’re letting a room temporarily whilst you travel or you’re a landlord with a sizeable portfolio, we can help.
If you’re already a client with our mortgage broker service, simply ask about landlord insurance and we’ll give you the details. Otherwise, contact us to arrange a no-obligation consultation and we’ll talk through your requirements.
Read on to learn more about what landlord insurance covers and how it works.
What is landlord insurance?
Landlord insurance is a type of home insurance designed specifically for properties that are being rented out to tenants. As such, it recognises the additional risks that are present where tenants are involved. The aim is to accommodate the kinds of eventualities that are more likely to occur in rentals than in owner-occupier situations.
What does landlord insurance cover?
A basic landlord insurance policy will cover similar issues to what an ordinary home insurance policy does, meaning damage to the building and, in some cases, its contents. However, rental properties are often vulnerable to additional wear and tear, so the premiums are usually somewhat higher.
There are also more sophisticated landlord insurance policies that include additional features like liability insurance, rental protection and legal expenses cover in the event of a tenant dispute. A wide range of eventualities is covered by the various policies out there, so it’s important to get the full picture of what’s available.
Is landlord insurance mandatory?
The higher cost of landlord insurance can put some people off and many people ask us if they are legally required to take it out when they have a good home insurance policy in place already. The important thing to remember is that, if you are renting out a property for any length of time, there are additional risks involved that an ordinary home insurance policy simply doesn’t cover. In fact, chances are a normal home insurance policy will be invalidated if you decide to let out the property.
If the larger premiums of landlord insurance are a cause for concern, come and speak to the experts at Think Plutus and we will help you find a viable solution. We can get you on the right track to ensuring your investment property is protected in the event of damage occurring that could have an impact on its value and cost a lot of money to repair. Get in touch today to get started.
Different types of landlord insurance
The majority of landlord insurance policies fall into at least one of the following categories. Bear in mind that it can be possible to mix and match features from different categories into a single product.
Landlord’s buildings insurance
This type of policy covers your property in the event of damage to the structure or fabric of the building. This can include things like fire and smoke damage, leaking roofs, water damage and other issues that can cost a lot to fix. In most cases, bathroom fittings like basins and toilets will also be covered.
In addition to the risks that most buildings insurance policies cover, landlord’s buildings insurance often covers types of damage that can be associated with bad tenants, such as vandalism.
A large number of modern buy-to-let mortgages encourage you to have landlord buildings insurance in place. Any existing insurance is usually invalidated once tenants move into the property.
Landlord’s contents insurance
This can be bundled with landlord buildings insurance or it can be an add-on. It is usually only applicable to rental properties that are furnished with your own belongings, covering everything from carpets through to white goods, and even kitchen utensils and crockery.
Landlord’s contents policies are usually flexible to provide different levels of cover for these items. Theft, fire and other types of damage can all be factored in and you may want to include an accidental damage feature for when things like breakages and spillage happen.
Tenants are still responsible for insuring their own possessions.
Rental protection insurance
This is a kind of ‘premium’ add-on to your landlord cover, designed to pay out in order to maintain your income if the property is damaged to a degree that makes it uninhabitable for any length of time. If the rental income you take each month is something you rely on, this insurance can maintain that income for you whilst the repairs and refurbishments are being made.
This insurance cover is sometimes known as ‘rent guarantee insurance’, and can be tailored to cover gaps in rental income for a wide range of reasons. Tenant defaults can be included, meaning if a tenant fails to pay their rent for one month or more, the insurance will ensure you aren’t left out of pocket.
Public liability insurance
If a tenant is injured whilst inside your property, they have a legal entitlement to make a claim against you. This could prove very costly if things don’t go your way. With public liability insurance in place, you will be covered – it’s similar to the policy of the same name that public venues take out, but tailored to private properties.
Legal expenses cover
This cover is designed to help with a broad range of legal costs that could be the consequence of any kind of dispute with your tenant(s). The cost of convictions, rent arrears, resolution of thefts and damage to your property could all be covered, as well as alternative accommodation costs if your property is rendered inaccessible. Always read the terms and conditions of a policy to get the full picture of the risks that are covered.
For landlords who own two or more investment properties, many insurers will permit the purchase of a single policy that covers multiple properties at once. This usually works out cheaper and far simpler than arranging separate insurance for each individual property.
How much does landlord insurance cost?
Generally speaking, landlord insurance premiums are higher than those associated with standard home insurance, since more risks are present.
The exact price depends on a number of factors, such as:
- Location: As with standard home insurance, certain locations come with greater risk. Areas vulnerable to subsidence or those at risk of flooding are likely to push the premium higher.
- Property size: Simply put, the bigger the property, the more there is to insure, so the premium goes up.
- Tenants: Certain types of tenants, like students, are seen as higher-risk than others, so premiums go up when they are involved.
- The type/level of cover you want: Different types and levels of cover cost different amounts, and the voluntary excess will play a role too.
What type of landlord insurance is right for me?
With such a wide range of options available, there is a solution to fit virtually any landlord. The key is finding the right one, and there are some less obvious issues that need to be taken into account, such as:
- Is your property furnished or unfurnished? If it’s the former, a contents policy may well be a good idea alongside buildings cover. If it’s the latter, are there any expensive white goods or other items that it would be a financial burden to replace?
- Do you own two or more rental properties? If you do, portfolio insurance is likely to be more cost-effective and efficient than taking out numerous single policies.
- Is your rental income something you depend on? If your own financial commitments depend on this income stream, a rent protection policy could provide valuable peace of mind.
These are just a handful of the many considerations that need to be accounted for when identifying the most suitable landlord insurance package for you. The best approach is to consult the insurance experts at Think Plutus to get up-to-date, professional insights into the options available and the right deal for your circumstances.
Is landlord insurance necessary for an Airbnb or short-term let?
If your property will only be rented out for a few weeks of the year, a 12-month insurance policy with a sizeable premium would probably negate any income from your temporary guests.
As Airbnb and similar initiatives have arisen, there are now all sorts of insurance products designed for occasional and short-term landlords. There are even policies that only cover a single room. The policies available can cover you in the event of theft, property damage, legal expenses and even injury to your guests.
Do I need landlord insurance if I have a lodger?
The insurance challenges of lodgers are similar to those with AirBnB room rentals. Namely, the tenant shares the same space with you and can access the property even when you’re out. Essentially, this arrangement turns your home into a ‘House in Multiple Occupation‘ or HMO.
Standard home insurance policies do not cover HMOs, so it will be necessary to seek out a product designed for arrangements with lodgers. These policies are not usually as expensive as those covering rental situations where the landlord doesn’t live on-site.
What about if I rent to family members?
If you rent your property to family members you will need landlord insurance. You will also need to notify your mortgage provider as well. However, the number of ‘extras’ required for family tenants is usually smaller, such as protection against damage or theft (as long as you have a good relationship with your relatives, of course!) This helps keep the costs down.
Get expert advice
If landlord insurance is something you need to arrange and you would like to have an expert in your corner to ensure you get the best deal, contact Think Plutus. Our specialist advisers can help pinpoint the best product for your circumstances from the full market of landlord insurance products. You can get in touch by telephone or drop us an email via the contact form and we will arrange a no-obligation consultation to get the ball rolling.
To get the best landlord insurance deal for you, Think Plutus.