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Landlord insurance is a must have if you are renting out your property, as it offers you peace of mind and protection in case the unexpected happens. Even with the newest properties and most reliable and well-behaved tenants, the risks remain. However, we know that landlord insurance can be costly, so we’ve put together the ultimate guide with some tips and tricks to help you save some precious pennies!
- Comparing prices is key
- Consider combining your policies
- Getting the right rebuild cost
- Consider increasing your landlord insurance excess
- The importance of security
- Be picky
- Minimize the vacant periods for your property
- Avoid making multiple small claims
- Save on interest by paying in full
- Final thoughts
Note: this advice largely applies to residential landlord insurance; whilst commercial landlord insurance is a different product, many of these tips can apply to business properties as well
Comparing prices is key
One of the quickest and easiest ways to save money on landlord insurance is to first start by shopping around and comparing quotes, rather than opting for the first provider that pops up. This way, not only can you compare prices but you can also compare the level of coverage that each policy offers. For example, for the same price one policy might offer £2m landlord liability but another may offer £5m. Comparing quotes is the best way to ensure you are getting a value for money.
There are plenty of comparison sites out there which make comparing landlord insurance quotes simple — we’d recommend our partner site QuoteZone, who will analyze your details using their search engine to connect you with suitable landlord insurance providers.
To save you some of the legwork, we have also done our own research and have put together a variety of reviews and quote comparisons for you to have a look at, ranging from DirectLine and Aviva to JustLandlords and CIA so be sure to check those out.
Consider combining your policies
You will often find that combining your policies results in better value all around. Most landlord insurance providers offer many different types of cover, ranging from buildings and contents insurance, to landlord legal expenses and home emergency insurance.
Naturally, any insurance provider would prefer for you to stick around and take out multiple polices with them to avoid losing customers to competitors. Because of this, most will offer you to the chance to pick and choose your level of coverage, combining your policies into somewhat of a ‘policy package’...and will give you discounts for your loyalty!
Not only do providers offer the chance to combine different types of landlord insurance cover, but many will also give you discounts if you are already a customer with them. For example, if you have already taken out car insurance with a provider, they might offer you a discount of 10% if you also opt for their landlord insurance policy!
Lastly, this is an easy way to save money if you are a landlord looking to insure multiple properties, such as a portfolio of flats, as there are some specialist landlord insurance providers that offer a multiple property discount. For example, DirectLine and CIA offer incentives to landlords who fit into this category, so make sure to check them out, too.
Getting the right rebuild cost
When taking out landlord buildings insurance, you will be asked to give a rebuild cost which is essentially how much money it would take to rebuild the entire property from scratch if it was destroyed. This can be confusing, and many make the mistake of thinking the rebuilt cost equates to the market value of the property, so don’t be caught out here.
Crucially, the rebuild cost of a property can affect the cost of your landlord insurance significantly. The more expensive it is to rebuild a property, the more expensive the premium. Ensuring you accurately estimate this is essential. If you underestimate these costs then you may end up paying out of pocket if your property is damaged, and overestimating it can result in you paying far too much for your insurance overall.
There are plenty of free resources online that will help you to calculate the rebuild cost for your property, so this process needn't be too stressful.
Consider increasing your landlord insurance excess
With most general insurance policies, you will have what is called an ‘insurance excess’. In a nutshell, this is the amount of money that you, as the policyholder, have agreed to pay towards any claim you make. There are two types of excess: compulsory and voluntary.
- Compulsory excess: this is determined by your insurance provider, and is the minimum amount that you are required to pay towards a claim. Typically, this will hover around £100, but it can be higher or lower depending on a variety of different factors. In the case of landlord insurance, they will likely take things like previous claims history into account.
- Voluntary excess: this is optional, and you will be required to pay this in addition to the compulsory excess.
So how can this save you money? Well, typically the higher the voluntary excess the lower the overall insurance premium. If you can afford to increase your voluntary excess amount then it may be worthwhile considering. Remember though, you could end up paying out for more than you expect, so be absolutely certain of the amount you can realistically afford to pay towards a claim.
The importance of security
As a landlord, you’ll be well aware of the importance of making sure your rental property is secure. But did you know that this could positively impact your premium? As standard, insurers will expect you to have good quality windows and doors with secure locking mechanisms in place. However, you will find that many insurers offer incentives and discounts if your property has other security features as well! For example:
- Burglar alarm
- Security lights
- If your property is registered under the Neighbourhood Watch Scheme
Having additional levels of security means you are less likely to have to make a claim associated with theft and burglary, which will reduce your premium overall. That aside, it can also offer both you and your tenant's peace of mind knowing your property has a high level of security in place.
Being a landlord is not without its risks, but there are ways that you can reduce the likelihood of these occurring by being a bit pickier, which will make insurers view you more favorably.
For example, being selective with the types of tenants you allow to rent your property. Certain types of tenants are perceived to be more and less risky, for example, those who are in full-time employment are generally preferred as they are less likely to miss a rental payment as they have a stable monthly income. On the other hand, having student tenants is deemed to be much riskier as there is the preconception that they will not treat the property with due care.
Opting for less risky tenants, such as those who are employed or retired, means your premium will be lower in the long run as it is less likely that you will need to make a claim.
Similarly, choosing not to allow pets in your property could also save you money further down the line. Having a pet increases the chances of wear and tear, staining and damage, increasing your likelihood of having to make a claim. You will find that most contents and accidental damage insurance will not cover the costs of damage inflicted by naughty pets anyway, and you will more than likely have to pay out of pocket.
Minimize the vacant periods for your property
The risk of damage, crime and theft increases significantly the longer your property is vacant. For insurers, if your property is vacant for extended periods of time it will likely result in much higher premiums, due to a higher chance an incident will occur.
Typically landlord insurance providers aren’t keen on properties being vacant for longer than 30 consecutive days, so if can ensure your property isn't vacant for longer than this between tenants then you will likely reap the rewards and save overall!
Avoid making multiple small claims
As with most, if not all types of insurance, having a history of claims will increase the price of your premium and also renewal. It might do you well to consider whether making a claim for a small amount of damage is truly worth it — is this something you could repair yourself for a relatively low cost? The more claims you make, the higher your costs in the long run and you may even find that some insurers are put off by this, and won’t offer you landlord insurance at all.
Making the sacrifice to pay a small amount out of pocket might lead to you saving a lot of money in the long run. Remember though, you may need to report situations where you could have claimed but didn't, meaning you can't necessarily hide a claimable situation from your insurer in order to avoid a negative mark on your claims history.
Save on interest by paying in full
Lastly, an easy way to save money overall on your landlord insurance is to opt for paying in full rather than in smaller, monthly installments. Although paying a lump sum upfront sounds less appealing, you will find that the interest rates for paying monthly can be 20% (or more!) which adds significantly to your landlord insurance costs. So, making an upfront payment can be an easy win for landlords that are financially able to do so!
Regardless, we always recommend discussing your payment options with your provider to see what will save you the most money overall.
Although landlord insurance can be expensive, and we recognize the desire to save money, it’s important to remember that cheaper doesn’t always mean better. When comparing quotes for example, make sure you read the policy terms carefully so you understand what is and isn’t covered. Opting for the cheapest cover might save you money to begin with, but it could end up being very costly if you need to make a claim and realize you aren’t protected by your insurer!
This is why we always recommend reading the policy wording so you don’t get caught out. Although saving money is always nice, remember that value is more important and you should always aim to find a policy that gives you the protection you need. Then, you can look for easy and simple ways to save a little bit of money such as those we’ve outlined above. This way you aren’t comprising good quality protection and can sleep easy knowing you’ll be covered if the worst happens.