Landlord insurance can be as basic or comprehensive as you like, depending on your assessment of the risks you face and the amount of money you could afford to lose should the worst happen.
All policies should include building and public liability insurance as standard. Some will include additional perks such as boiler breakdown or subsidence cover.
According to NimbleFins, landlord building insurance covers a premise and things attached to it, while public liability covers the legal and compensation costs if a landlord is deemed liable for damage to someone else’s property or injury to a third party sustained on the premises. These are explained in more detail below.
Additional extras that a landlord may wish to consider include:
Contents insurance: Covering the cost to replace or repair goods owned by the landlord, such as free-standing white goods or easily moveable floor coverings such as carpets. It doesn’t cover wear and tear or general deterioration, but will safeguard against fire, water or oil leak, theft or attempted theft, storm, flood, vandalism, and usually impact and subsidence. Anything fixed to the building is not deemed contents, instead of falling under building insurance. While carpets and linoleum would be classed as contents, tiles, wooden floors, and most laminates would come under building insurance.
Accidental damage: Covering damage to both contents and the building if something was damaged unexpectedly. This could be a door frame broken while moving a sofa or hair straighteners burning a carpet, for example.
Legal expenses: Providing access to legal experts and the money to pay them to assist with legal issues such as debt recovery, eviction, investigation.
Tenant default insurance: Also known as a rent guarantee, insurers will pay a landlord lost rent if a tenant misses a payment. With rent arrears set to treble after the coronavirus pandemic, a rent guarantee could be wise to consider if the landlord cannot forgo the income.
Loss of rental income: This covers the money lost if the home is uninhabitable and cannot be rented out for certain reasons, such as during major refurbishment after a fire.
Landlord building and contents insurance
Landlord building insurance covers the structure of a property, while contents insurance protects the moveable items inside. While contents protection may seem like an essential part of home insurance, it is not always needed for landlord cover – especially if a property is let out on an unfurnished basis.
Building insurance forms the basis of any landlord policy and protects the homeowner from repairing and rebuilding the structure of a property, including items fixed to it. Unless the property is underinsured, providers will pay for the cost to completely rebuild the property in the unfortunate event of it being destroyed.
If the building sum has been calculated correctly, building insurance will cover the cost of demolition, removal of debris, local authority and expert fees, as well as the material and labour that goes with rebuilding the property.
Some landlords choose not to include a contents insurance premium onto their policy because building insurance also protects against many items fixed into the building. This includes fitted kitchens and bathrooms, fitted wardrobes, floor tiles or laminate flooring, among other things. In short, building insurance covers anything which could not be reasonably moved without becoming damaged. Despite being fitted, carpets would fall under contents insurance because they can theoretically be moved to another home.
With some properties only including a few of the landlord’s items – such as a free-standing fridge or washing machine – many choose to instead take on the cost of replacing them rather than pay extra insurance.
It is a landlord’s decision to weigh up the value of the goods which would fall under contents and the risk of them becoming damaged, along with the ability of the landlord to cover the costs themselves.
Property owners’ liability insurance
Property owners’ liability insurance protects landlords against compensation claims from a tenant, tradesperson or visitor if they were injured or die at the rented home. These third parties may also take legal action against a landlord if their property was damaged at home.
It could be claimed the landlord was negligent, and they could be taken to court. Liability insurance would cover the legal costs, compensation and medical bills of the claimant.
An example of property owners’ liability insurance is if a light fitting fell and damaged a tenant’s laptop, they could sue the landlord for damages. Or if the landlord had left a loose paving slab and a visitor tripped and broke their leg, leaving them unable to work, they could sue the landlord for compensation, including any lost income. The liability insurance would cover the legal defence costs and any damages awarded.
Damage to neighbouring properties as a result of an incident at the landlord’s property can also be covered by liability insurance.
Personal injury claims can result in significant compensation, and without liability insurance, the landlord may have to meet these costs themselves.
Liability insurance is usually one of the standard elements of landlord insurance, with the other being buildings insurance.
Landlord insurance legal expenses cover
Landlord insurance legal expenses cover might be included as standard with a landlord insurance policy or might cost an additional premium. A landlord may require legal assistance for eviction, repair and renovation disputes with contractors, property disputes against the terms of the tenancy or a nuisance tenant, eviction order, or rent recovery.
A landlord may also find they need defence in the event of a health and safety investigation, tax investigation, or tenant dispute.
Disputes will usually only be covered if the odds of winning are deemed to be over 50%. This is to stop flippant claims from being pursued.
Some landlord insurance packages may provide basic documents and advice to arm the landlord with some fundamental information. But a specific clause in the policy can cover expensive legal costs, which could run into the hundreds of thousands of pounds.