Business Insurance

Landlord Insurance Guide: What To Look Out For

Navigating the world of landlord insurance can be tough, for experts and first-timers alike! We understand how important finding the right the policy is, so we have put together a guide on what to look out for before you sign on the dotted line, to ensure you really are getting the best deal.

Landlord insurance (and insurance in general!) can be a minefield, especially for those landlords that are new to the game. It’s no surprise, really, considering landlord insurance documents and guides can include all sorts of jargon that can catch you off guard!

Given the complexity of landlord insurance we find time and time again the same types of questions being asked and the same mistakes being made—these can relate to costs, making a claim and even how to pick apart ratings and reviews.

With this in mind, we have curated the ultimate guide to purchasing landlord insurance in the UK, with top tips on what to look out for to ensure you are getting the best deal. We’ll cover a range of different areas with the overall aim of making you feel confident when signing on the dotted line.

Get landlord insurance quotes today.

What cover is included in your policy?

One of the most common questions we see relates to the many different types of landlord insurance cover that are available to purchase. From buildings to contents, accidental damage and more, we understand that many landlords are confused about what is considered ‘essential’ and what can be considered ‘nice to have’. You'll find that some of these are commonly included as standard in most landlord insurance policies with others being sold as an optional add-on (i.e. for an extra cost!).

Here we’ve broken down the most common types of landlord insurance to help you understand not only what your policy covers, but also so you can decide which types of cover work best for you and give you the protection you need.

More often than not you will find that buildings insurance in included as standard in your landlord insurance policy.

Buildings insurance essentially covers the cost of repair if your property is damaged as a result of certain events listed in your policy — typically this included things such as fire, smoke, explosion, lightning, storm and flood. This may also damage damage or loss as a result of theft or attempted theft, subsidence, landslip or heave, but not always so be sure to check your policy wording carefully.

If any of the contents you provide to your tenants (e.g. sofas) are lost or damaged as a result of any type of event listed in your policy (typically similar to those covered by buildings insurance!) landlord contents insurance will cover the cost of repairing or replacing these.

If you end up losing rent due to the fact your property has been made uninhabitable, for example as a result of a fire or flood, loss of rental income insurance will protect you against these losses. You may find this type of cover will also cover the costs of providing suitable alternative accommodation for your tenants until your property has been made habitable again.

This type of cover offers landlords with that extra layer of security and peace of mind, especially for those who are highly dependent on this income!

As the name suggests, accidental damage within the context of landlord insurance will generally cover you against genuine accidents, whether this is caused by you, your tenant(s) or a third party guest.

Some landlord insurance providers may offer protection against all types of accident as standard within their main landlord insurance policy, whilst others may only cover specific events, for example, accidental damage occurring to underground pipes or cables servicing your property and for which you as a landlord are responsible. On the other hand you may find this is only offered as an optional add-on to be purchased alongside your main policy.

Landlord liability is incredibly important, so much so this is usually included as standard with the limit of cover ranging from between £1 million to up to £10 million in some cases.

Crucially, this type of insurance will cover the costs if a third party makes a claim against you for suffering sickness, injury or if their property is damaged as a result of your actions or your property. Some examples of common types of areas this cover applies to includes the costs and expenses of legal representation, awards of damages cover (e.g., for bodily injury to any person), compensation for court attendance and safety legislation defence cover (regarding an alleged breach of statutory duty under Health and Safety, Consumer Protection or Food Safety legislation).

As you can see, this type of cover is incredibly important!

It is a legal requirement to take out Employers' liability cover as soon as you hire an employee (note: there are some exceptions!). This cover protects you if you're sued by an employee for a work-related injury, illness or death that happened because of work.

Disputes between landlords and tenants can and do happen, and if a tenant intentionally loses or damages your property or any contents that you supply, this will cover the costs associated with repair and or replacement.

It is important to note that not all landlord insurance providers will cover malicious damage by tenants, so be sure to read your policy wording carefully.

In the event of an emergency landlord home emergency insurance typically offers cover for call-out costs, labour and the parts required to resolve the issue.

What is defined as an 'emergency' will vary from policy to policy, but may in include events such as gas and electricity system failure, boiler breakdown, damage, blockage, breakage or flooding to plumbing and drainage as well as damage or failure of external doors, windows or locks.

Unlike loss of rental income, rent guarantee insurance will cover you if a tenant is unable to make rental payments regardless of whether your property is habitable or not (e.g. if the tenant has recently lost their job).

This is certainly worth considering for any landlord who heavily relies on this rental income, for example, if it goes towards paying off a mortgage!

With landlord legal expenses cover you will typically gain access to a legal advice helpline and will be protected against the costs of unexpected legal fees associated with e.g. repossession, rent recovery, damage to your property, nuisance and trespass up to a certain limit.

Now, not every landlord insurance provider will cover all of the above events and fees so be sure to read your policy wording carefully. Nevertheless, disputes can and do happen between landlords and tenants, so this cover will offer peace of mind if you find legal action is taken further down the line.

So, what type of landlord insurance is right for you?

Prioritize ensuring you have the level of cover appropriate to your needs rather than simply opting for the cheapest insurer out there

Now we know a little bit more about the different types of cover available to landlords the question that naturally follows is ‘what type of insurance do I need?’

Whilst landlord insurance isn’t a legal requirement it is still important! Most mortgage providers, for example, will require you to have adequate cover in place. When it comes to the specific type(s) of cover you need, this will of course depend on your individual circumstances as well as the type of property that you are letting. You will find that most landlord insurance policies contain buildings cover and landlord liability as standard, giving you the flexibility to pick and choose any additional types of cover on top of this.

But what is 'essential' and what is 'nice to have'? Here are some common questions you should ask yourself when thinking about purchasing landlord insurance.

  • Is your property furnished or unfurnished? if your property is furnished it may be worthwhile taking out landlord contents cover in case the furniture and other items are damaged during a tenancy. Going without could ultimately cost you a lot of money if a rather expensive sofa for example needs replacement or repair! If your property is unfurnished then you might get away with going without this cover, as it would be down to your tenants to ensure the appropriate type of contents insurance is taken out.
  • Are you highly dependent on rental income? a very important question all landlords should be asking themselves is how much they rely on income from their rental properties — for example, do you use this income to help pay off your mortgage? If you find you are highly dependent then it is definitely worth considering cover such as loss of rental income and landlord rent guarantee, as this will protect you in the event your tenants are unable to make rental payments.
  • Do you require insurance for one property or many? if you are a landlord with multiple properties (a property ‘portfolio’) then an easy way to save money on landlord insurance is to opt for a provider who offers portfolio cover. You will find that these insurers typically offer discounts if you insure more than one property under the same policy, for example AXA and CIA offer these.
  • Is your property used for residential or commercial purposes? again, this is incredibly important as insurers do make this distinction. If your property is used solely for residential purposes then a typical buy-to-let landlord insurance policy will suffice. However, if your property is used for commercial purposes (e.g. business) then you will need cover specifically tailored for commercial properties!
  • Also, if your rental property is a combination of the two (e.g. a flat above a corner shop) then again, you will need to get cover that is specifically tailored to protect against these risks. Make sure you aren't caught out by purchasing th wrong type of cover and you can always discuss with an insurer to ensure you take out the correct one!

In all cases when purchasing landlord insurance, you should always think carefully about your own circumstances and the risks you might face. Whilst saving money is a priority for many, our advice is to always ensure you take out a level of cover appropriate to your needs, rather than simply opting for the cheapest insurer out there.

We recommend always conducting your own research prior to signing any agreement and reading any policy documents carefully so you understand what you are and aren’t covered against. To make things easy for you we have conducted a series of independent reviews of some of the UK's leading landlord insurance providers on the market, such as Direct Line, Alan Boswell, Aviva and LV= to name a few, so be sure to check these out!

Be aware of factors that can affect the cost of landlord insurance

As with most types of insurance there are some factors that providers will take into account when processing a quote, and these may increase or decrease your overall premium.

It is important to bear this in mind both when purchasing landlord insurance for the first time as well as when it comes to renewal — you may find you are faced with a significant increase if you’re not careful!

Here are some common factors that will typically affect the overall cost of landlord insurance to help you stay in your insurers good books:

  • Number of claims: an extensive claims history signals to insurers you are more likely to make a claim in the future, increasing your premium. An easy way to save money is to try and avoid making multiple small claims if possible and ask yourself whether you can feasibly resolve the issue by paying out of pocket
  • Tenant type: some types of tenant are seen as 'more risky' than others, for example students and those who are unemployed. As a result, you will find the cost of landlord insurance to be higher if you rent out your property to these groups
  • Tenant referencing: tenant referencing is a crucial part of the lettings process, as it is your chance to screen for any potential problems before an agreement is signed. Many insurers will only provide some types of insurance subject to sufficient pre-tenancy checks having taken place, and you will find the cost of your premium will change depending on how thorough these checks are. We found carrying out proper tenant checks (e.g. credit checks, tenant references and right-to-rent checks) could save you up to 15% on your landlord insurance. It's also important to note that in many cases you can only claim on certain types of cover (such as malicious damage by tenants) if these checks have taken place — this is an easy way to be caught out!
  • Type, age and location of your property: these are all things that will affect the cost of your premium — older properties for example tend to be the most costly to insure as they are often aren't built according to the same safety standards as modern properties, meaning they are more expensive to put right! Similarly, some property types are cheaper to insure than other — research conducted by NimbleFins found that semi-detached houses are on average the cheapest to insure whilst an individual flat in a converted building is most expensive!
  • Rebuild cost: the cost of your landlord insurance is directly impacted by the rebuild cost of your property — the amount of money required to rebuild a building if, say, it is damaged beyond repair in a fire. Note, this is not the same as the market value of your property! Unsurprisingly, properties with a higher rebuild value are more expensive to insure as your insurer could face larger losses in the event you need to claim. Ensuring you get an accurate rebuild cost is crucial to avoid unnecessarily high premiums, and there are plenty of free resources online to help with this
  • Your 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. You'll have a compulsory excess that is determined by your insurance provider and a voluntary excess, which is optional. Look out for this when obtaining quotes for landlord insurance — the more you are willing to pay towards a claim the lower your overall premium. So, if you can afford to do so this is an easy way to save some money
  • Adequate security: as standard, insurers will expect you to have good quality windows and doors with secure locking mechanisms in place. 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, so be sure to look out for this.

Don't get caught out by policy exclusions

An important thing that can be easily overlooked when purchasing landlord insurance is remembering to take a look at your list of policy exclusions i.e. what events aren't covered by your insurer should you need to make a claim. This is crucial as you may find that your policy doesn't cover what think it does, which could result in you having to pay a lot of money out of pocket to resolve any issues!

Policy exclusions tend to be clearly listed in your landlord insurance documentation so ensure you spend some time getting familiar with these. Whilst there are some understandable exclusions, e.g. most insurers won't cover general wear and tear as this is to be expected, there are others that tend to catch landlords out.

Take this scenario, for example:

  • If you find that there is a leak in one of your rented properties and you wish to make a claim, you may find that your policy will cover the costs of fixing the damage caused by the leak, rather than the leak itself. It sounds almost counter-intuitive and may lead to you to becoming quite annoyed with your insurance provider when they tell you this is outlined in your policy documentation.

Be sure to get into the habit of reading your policy wording carefully. Whilst it may not be the most fun task out there it may certainly save you a lot of money in the long run!

Keep a note of your unoccupancy period

Another key piece of information many landlords overlook is the unoccupancy period stated in their policy — this is the maximum length of time your property can be left vacant and in which your insurance will still be in place.

Some landlord insurance providers will insure a vacant property for up to 30 days whilst others have an extended unoccupancy period of up to 120 days. So, why is this important? Well, typically if your rental property is vacant for a longer period of time than that which is stated in your policy, any claims you make during for damage or less occurring within this time-frame won't be covered.

Overlooking a simple detail such as this could end up costing you a lot of money if you make a claim believing your insurance will cover this, only to find out your cover was restricted the moment your property became vacant!

Watch out for hidden fees

When signing any sort of agreement one piece of advice is always given — make sure you read the fine print!

Landlord insurance is no different, and hidden or ‘sneaky’ fees are most certainly on your list of things to look out for. Some providers will attempt to hook you in with low premiums whilst simultaneously including lots of additional charges elsewhere, for example, cancellation fees.

Whilst you can’t avoid these altogether it is definitely worth factoring these in so as not to be surprised further down the line as these admin fees can add up quickly. Here are some common things to watch out for:

  • Cancellation or change of contract fees: many insurers will charge a fee if you wish to cancel your policy with them, whilst others will even charge you if you wish to change the details on your landlord insurance policy, for example, the name of a tenant!
  • Interest rates when paying monthly: one of the easiest ways to save money on landlord insurance is to pay the full amount upfront. This is because insurers will often charge interest if you decide to pay in monthly installments meaning your overall premium could be significantly more than you originally thought.
  • Limits on cover: it may seem obvious, but this is another detail that can be easily overlooked. Most types of landlord insurance will come with a limit on the amount you can claim, so anything above this means you will have to pay out of pocket!

Check out the Defaqto rating

Defaqto is an indpendent business providing information to consumers in the financial services industry. They compare a wide variety of services and products before assigning them a Defaqto star rating, their measuring system for the quality of said service or product.

Defaqto’s analyst teams scour the UK market, scanning through terms & conditions, small print and policy wordings to understand the benefits and limitations of each individual product. As a result it has earned a reputation for being one of the best indicators of product quality.

When comparing quotes for landlord insurance and researching different providers it is well worth taking a look to see what rating is has been awarded by Defaqto (if any!). A 5 star rating indicates that Defaqto's experts deem it to be one of the best products on the market, 3 stars represented an 'average' product and a 1 star rating means the product is seen to provide only the basics.

However, it is important to do your own research, too. Defaqto, whilst an excellent indicator of quality, does not take into account things such as cost which may be a deciding factor for more price-sensitive landlords. Looking at customer reviews and ratings is an excellent way to get a better understanding of how well a product performs, which brings us onto our next piece of advice...

Make use of customer reviews and ratings

Whilst a Defaqto rating gives you an unbiased view of a product's overall quality, another excellent way to see whether a company or policy is right for you is to see what it's existing customers have to say.

There are many websites out there dedicated to compiling customer feedback such as Trustpilot and Feefo. This makes it even easier to see which companies are performing well in terms of customer experience and which are leaving their customers frustrated and looking elsewhere.

Some things you might want to look out for when sifting through company reviews include call wait times, how easy it was to make a claim, friendliness of staff and how likely they are to recommend this product or service to others. This way you can get a good idea of whether customers really do place trust in a company, and can make your decision of which insurance provider to opt for much easier!

The importance of good customer service

Our last piece of advice as to what to look out for when purchasing landlord insurance is to remember the importance of good customer service. This is especially true in the event of an emergency (e.g. the boiler breaks down in the middle of winter!) and you need to get a hold of someone quickly to resolve the issue.

There are some little things to watch out for when researching an insurance company — for example, is their claims or customer service line open 24/7 so you can speak to someone and get advice when you really need it? Are the call centres based in the UK or overseas? A UK-based claims service means a company has more direct control over the quality of it's service, meaning you are more likely to receive a more positive experience!

FAQs

In the UK you are not legally required to take out landlord insurance if you rent a property out to others. This doesn't mean that it's not important, however! Landlord insurance can protect you when things go wrong, for example, a tenant is unable to make their rental payments or your property structure is damaged due to a fire.

Without adequate protection in place you could face having to pay a lot of money out of pocket that would otherwise be covered by your insurer, which is why we always recommend taking out good quality landlord insurance cover that is tailored to your needs.

Unfortunately, standard homeowners insurance isn't equipped to cover the additional risks that landlords face when renting out properties to others, such as rent guarantee, landlord legal expenses and Landlord liability to name just a few!

Don't be caught out by assuming homeowners insurance is enough and always invest in specialist landlord insurance to ensure you are protected.

Getting the right rebuild cost is crucial as this can significantly impact the cost of your landlord insurance as well as the amount of money you may have to pay out further down the line. If you underestimate these costs then you could 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.

To get a more accurate estimate of the cost to rebuild your home we recommend using an online calculator, such as the BCIS free rebuild cost calculator. There, you can find a more accurate estimate that reflects the size and other describing features of your home, as well as costs in your local area.

Simply put, residential landlord insurance and commercial property landlord insurance cover different risks associated with renting a property out to tenants versus a third-party business.

Commercial property insurance may be applicable to:

  • Commercial property owner-occupiers
  • Property owners who rent out their properties to other businesses
  • Renters (but they won't need buildings cover — that's the landlord's responsibility)

Commercial property insurance will cover events such as business interruption (sometimes known as 'business income insurance') which will protect against income lost or extra working costs if a covered disaster leaves you unable to trade, that a typical residential landlord insurance policy won't.

We would advise speaking to your insurer about your the circumstances surrounding your rental property to ensure you are taking out the right policy to suit your needs.

Thankfully, the internet makes it incredibly easy to compare landlord insurance providers online within as little as a few minutes!

We’d recommend our partner site QuoteZone, who will analyze your details using their search engine to connect you with suitable landlord insurance providers.

There are many simple and effective ways you can save money when purchasing landlord insurance from increasing your voluntary excess to paying upfront — luckily, we've put together a handy guide full of tips and tricks which you can access here.

Emily Bunt

Emily is a psychology graduate from the University of Kent, currently working as a Data Analyst at NimbleFins focused on insurance content for SMEs. Prior to this she worked in market research at Kantar, investigating consumer behaviour and decision making, as well as in a supporting role in the field of mental health. Learn more at LinkedIn.

Comments