Do I need landlord insurance?

Landlord insurance helps you to protect yourself, your property, and your tenants. Conventional home insurance policies aren’t designed to cover rental activities, and your mortgage lender will usually ask you to take out a specialist landlord policy.

In this article, we will cover:

• What is landlord insurance, and why do I need it?
• Is landlord’s insurance a legal requirement?
• What type of insurance do I need as a landlord?

Whether you’re self-employed or run a limited company as a landlord (learn about the pros and cons of each of them here), landlord insurance offers specialist cover for your rental property. Different policies will have different levels of cover, but a policy could cover things like

• loss of rent
• contents
• damage to your property
• claims made against you if someone is injured or their property is damaged

If you let a property but just take out standard home insurance in your own name, the insurance provider could refuse to pay any claims if tenants lived in the property.

If you want a buy-to-let mortgage, your lender might require you to have it in place to provide you with the extra protection you need against things like tenant damage to your property and rehousing costs. They can refuse to extend you a loan if you do not have the coverage they specify.

It’s important to note that you might also need an HMO license if your property has shared facilities or houses multiple tenants. You might also want to check out our Landlord Checklist for things you need to take care of before renting out your property.

There is no legal requirement for landlords to have landlord insurance, but a standard home insurance policy won’t protect you if you rent to tenants. Insuring your property without a dedicated landlord policy puts you at risk.

It may be a requirement for you to have a valid landlord insurance policy if you have a mortgage on the property.

Depending on your mortgage lender, you may also need written permission from them before you can lease your property, so it’s essential to make sure otherwise you could violate the terms of your mortgage.

If you need help maintaining reliable financial records as a landlord, check out our article Managing Your Accounts as a Private Landlord.

Depending on the risks you face, you may need different types of cover. The types of insurance you can choose from for your landlord insurance policy include liability insurance, buildings and contents insurance, and loss of rent insurance. 

Remember, you will not be covered for rental activities under a conventional home insurance policy.

We have listed some of the most popular covers you may need as a landlord:

Liability insurance for landlords protects you from claims arising from injuries or property damage suffered by a tenant or visitor due to a problem at your property. For example, if a tenant trips over a trailing wire and makes a claim for injuries, this cover may help you pay compensation or legal fees.

If your rental property is damaged or destroyed by an event such as fire, storm, flood or vandalism, your landlord buildings insurance may be able to cover the costs of rebuilding or repairing the structure.

Contents insurance protects your rental property’s household items, such as furniture and appliances, from theft or damage, but not from gradual ‘wear and tear’ over time. This policy doesn’t cover tenants’ possessions. Tenants must insure their own contents separately.

The accidental damage insurance covers accident-related damages, such as spilt wine on furniture and DIY accidents. The policy may also cover outdoor accidents, such as a child throwing a ball through a window. But, typically, it won’t cover simple wear and tear or damage caused by pets or poor workmanship.

The loss of rent insurance covers the income you lose if your property becomes uninhabitable due to an insured event, such as a fire or flood. You will not be covered if your tenants default on their rent, which is covered by tenant default insurance.

In the event that you are contractually required to provide alternative accommodation if your property becomes uninhabitable, alternative accommodation insurance will cover this expense. Property must be uninhabitable due to a specified and insured event for this cover to be paid out.

If your tenants do not pay for at least two consecutive months, tenant default insurance can cover up to eight months of lost rent. You can add tenant default insurance to your landlord insurance policy if you conduct credit checks and background checks on prospective tenants.

Unoccupied property insurance protects your rental property even when it is vacant, such as before your tenants move in or between lettings. For your coverage to remain valid while your house is empty, you may have to make regular checks on the property.

Adding home emergency insurance to your landlord insurance policy provides you with 24/7 assistance if your property’s plumbing, drainage, heating or power supply fails or if damage to your doors or windows compromises the security of your property. It can also cover the cost of alternative accommodation for your tenants while the problem gets fixed.

Legal expenses insurance can cover your legal costs up to a specified amount and provide free legal help, so you have access to a property law expert when you need advice. If you find yourself facing steep legal fees, such as if you take a tenant to court to pursue rental arrears or need legal assistance to evict a troublemaking tenant, then this cover will protect you.

Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.