Given the astronomical cost of homes and commercial buildings in the UK, landlords should buy a comprehensive landlord insurance policy. But what types of coverage do you really need? This guide will aim to inform you of the risks faced by a landlord and explain the different types of insurance you can buy to protect yourself financially as a landlord.
Do landlords need building insurance?
While building insurance is not required by law, most landlords will choose to buy building insurance for their rented property. When you take into account the high cost of repairing and rebuilding a property, building insurance is typically viewed as a wise investment.
Building insurance covers loss or damage to a building that is caused by perils such as fire, flood, explosion, theft and more. For example, if a flood causes severe damage to a rented home, the building insurance should cover the costs to repair the flood damage.
Do landlords need contents insurance?
Whether or not a landlord needs contents insurance depends on how a property is offered for rent. Is it furnished? Does it come with expensive appliances, or even carpets and curtains?
Contents insurance covers loss or damage to furniture and furnishings, provided the damage is the result of a covered event like a fire, flooding or theft. If a property is rented on a furnished basis or even has carpets, curtains and/or appliances, then a landlord should consider buying contents insurance.
Some damage to furniture or carpets by tenants can also be covered under contents insurance, provided an “accidental damage” provision is included in the policy. Some insurers include this for free, whilst in other cases, it is sold as an add-on feature. In that case, a landlord would need to pay an extra premium to get this coverage.
Do landlords need public liability insurance?
All landlords should ensure they have suitable public liability insurance in place. Public liability protects against being sued if someone is injured on your property. In the case of a rented property, this could include injury to tenants, visitors, delivery people, repairmen and more.
If someone is injured whilst at a property they might blame the injury on the property owner, which in this case would be the landlord. For example, if a delivery driver trips on a broken paving stone and falls, breaking their arm, they might sue the property owner for negligence.
Public liability insurance provides access to a legal team for advice, as well as paying for any compensation the landlord would be required to pay to the injured party.
Do landlords need legal cover?
Legal expenses cover can be a very sensible purchase for a landlord when you consider the many things that can go wrong when renting out a property. There could be a dispute over the end of a tenancy, a tenant could fail to pay their rent, a tenant could sublet the property without the landlord’s permission—these are just a few of the situations in which a landlord needs legal advice.
Legal cover will provide access to a legal team experienced in these matters and will pay their expenses and any other related legal costs such as court fees. Ideally, there is a 24/7 helpline that a landlord can call if needed.
Do landlords need home emergency cover?
Unless a landlord has a contractor on speed dial to assist with any emergency home repairs, they’ll probably want to buy home emergency cover for their rental property. Home emergency cover is useful in the event such as a boiler breakdown, burst pipe, blocked drain, loss of heating or electrical failure. Policies vary in their coverage, so a landlord should carefully learn what is covered by a policy before buying. For example, a cheaper policy might include plumbing and electrics but not boiler and central heating cover.
Some home emergency providers will also sort the Gas Safety Certificate (CP12) for a property. While a home emergency plan will cover the cost of call-out fees and repairs, it won’t cover the cost to repair damage after the emergency. For example, in the case of a burst pipe causing a flood, the home emergency plan could cover the repair work to the pipe, but the property owner would claim on their building insurance to cover related water damage to a wooden floor.
In short, a landlord needs many different types of insurance. For starters, a landlord needs building and contents insurance to protect their property (e.g., the building and any furniture or furnishings) against physical damage or loss. A landlord should also have public liability insurance to protect against a lawsuit if someone is injured on the rented property. Home emergency cover is critical to deal with any issues that arise like a blocked drain, burst pipe or loss of heating, hot water or electrics. Landlords might even consider additional protection like a rent guarantee or loss of rent insurance. The former is used when a tenant fails to pay, the latter if a property is not rentable as a result of physical damage.