If you rent out a property, or are planning to, you may be asking yourself if you need landlord insurance.
While it’s wise to protect yourself and your investment with adequate cover, the type of insurance you need depends on your circumstances. For example, a landlord with a portfolio of buy-to-let properties will need different cover to someone who owns a holiday let or rents out a room in their own home.
In this guide, we answer some of the most common questions about landlord insurance and explain what types of cover are available.
- Is landlord insurance a legal requirement?
- Why do I need landlord insurance?
- Do I need landlord insurance if I live in the property?
- Do I need landlord buildings insurance?
- Do I need landlord contents insurance?
- Do I need landlord insurance and rent guarantee insurance?
- Do I need landlord insurance if I own a holiday home or an AirBnB rental?
- Do I need landlord insurance for a flat?
- Do I need landlord insurance if renting to family members?
- Find out more about landlord insurance
No, landlord insurance is not a legal requirement.
However, for most landlords it is a necessity. Most buy-to-let mortgage lenders will require that you have appropriate insurance in place. It’s also important to remember that normal home insurance won’t cover you for the risks associated with renting out your property, so if you want to protect your property and your investment, landlord insurance is essential.
When you rent out a property – or even a room – things can go wrong. If a tenant gets injured, they could sue you. Damage to your property or furnishings can be expensive to put right. If there’s a fire, flood or other disaster, you could be liable for providing your tenants with temporary accommodation. You may find that cost of living pressures leave your tenants unable to pay rent, and you without a rental income.
With the right landlord insurance you can make sure that you’re not out of pocket if any of these things happen.
If you rent out a room or part of your main home, you become what’s known as a ‘resident landlord’ or ‘live-in landlord’. It’s increasingly popular to take in lodgers in this way, not least because you can earn up to £7,500 tax-free each year via the government’s Rent a Room Scheme.
Unfortunately, many live-in landlords make the mistake of assuming their home insurance provides them with adequate cover. In fact, if you don’t inform your insurance company that you have a lodger, your cover may no longer be valid. That’s why it’s important to take out specialist landlord insurance; it can protect you from a much wider range of eventualities, including non-payment of rent.
Our guide to live-in landlords talks you through your options.
Generally speaking, if you’re the freeholder of a property that you rent out, buildings insurance is a must. If the property is a leasehold then, generally, the freeholder will be responsible for the buildings insurance, but it is important to check the terms of your contract to ensure this is the case.
Landlord buildings insurance is the main component of most landlords’ cover, particularly for buy-to-let owners. By insuring the structure of the building, along with key fixtures such as the kitchen and bathroom, you significantly protect your investment. Not only can buildings insurance cover the cost of damage from events like flood or fire, but it will also cover the full rebuild cost. You can give yourself further peace of mind by opting for a landlord buildings insurance policy with extra cover, such as for loss of rent, unoccupancy and property owners’ and employers’ liability.
Although it’s not a legal requirement, it can be sensible for tenants to hold contents insurance. These policies protect the majority of tenants’ belongings against flood, fire, theft, and accidental damage.
As a result, many landlords assume they don’t need contents insurance of their own. This can be a mistake if you let out a furnished property. For example, a tenant’s policy will not cover fixtures, furnishings, and fittings belonging to you. So, if your rental property contains valuable items such as white goods or soft furnishings, it’s wise to take out landlord contents insurance. If you use this Contents Calculator for landlords, you can work out the value of your property before getting a quotation.
If a tenant stops paying their rent, it leaves you without income, whilst still being liable for your mortgage payments (if you have one). By taking out rent guarantee insurance, you can protect yourself for up to 15 months of missed rental payments whilst you regain possession of the property. In addition, the cover can provide you with legal expenses and 75% of rental income for up to three months afterwards whilst you find new tenants.
Yes, if you want to protect your investment the right insurance is just as important for holiday homes as it is for buy-to-let properties. However, the type of insurance you need depends on how your holiday let operates.
Some property owners offer serviced accommodation, which combines aspects of a hotel with a traditional self-catering let. For example, they may offer services like housekeeping, plus washing and cooking facilities. Serviced accommodation insurance offers key covers such as buildings insurance, business interruption, public liability and employers’ liability.
Normal holiday homes are let commercially, but they have no added servicing. Many AirBnB lets fall into this category. Holiday home insurance offers similar cover to serviced accommodation cover, except it includes loss of rent and alternative accommodation rather than business interruption cover. You can learn more about the differences between the two types of cover in this article.
If you let out a flat, the type of insurance you need depends on whether you are a freeholder or a leaseholder. If you are a freeholder, you will own both the property and the land it sits on. If you are a leaseholder, you own the property for a set period of time, but you don’t own the land. You will often pay the freeholder ground rent and a service charge, which is a contribution to the upkeep and maintenance of the building and any areas outside (such as gardens, a lift, and roof maintenance).
As the freeholder is responsible for the whole building, they are usually responsible for arranging the buildings insurance as they have the insurable interest. Therefore, if you let out a freehold property you will need buildings insurance in your landlord cover.
If you let out a leasehold property, you should first check the terms of your contract to ensure that you are not required to arrange the buildings insurance. If you aren’t, then you should consider landlord insurance that offers at least contents cover and rent guarantee. If you’re unsure which insurance is best for you, find out more in our article do I need landlord insurance for a flat?
Many people become informal landlords by renting property to members of their family, such as adult children or elderly parents. In these cases, many people make the error of thinking that their normal home insurance will cover buildings and contents. This often isn’t the case, particularly if you don’t live in the property as well. Even though you trust your family member to look after your property, it’s essential to take out specialist landlord insurance that properly covers you against unforeseen problems. Damage or disaster can strike any home, and the last thing you need is a fire or a flood that you’re not correctly insured against.
We know that every landlord has different needs and it’s important to take a tailored approach to finding the correct insurance for your property and risks. You can find plenty more advice and specialist landlord insurance products on our landlords insurance hub.