Being a landlord isn’t as easy as buying a building, grabbing the first available tenants and sitting back to rake up the money.
Sometimes things go wrong, and if you don’t have decent landlord insurance, you’re about to have a no good, terrible, very bad day.
The private rental sector in the UK is growing year by year, with 35.7% of the population renting as of 2021, making approximately 4.6 million households in the sector.
That makes for a large amount of potential hiccups, accidents, and “Sorry, but the dog ate the floor” moments.
As of August 2024, there’s no legal requirement to have landlord insurance in the UK, unless you have an HMO – a house of multiple occupants – but if you’re looking to obtain a buy-to-let mortgage, your lender is highly likely to require it.
But apart from lender stipulations and awful pet scenarios, what would landlord insurance actually do for you?
Well, there’s a couple of very specific - but strangely common - problems landlords encounter, and some insurance policies have evolved specifically to address them. It’s important to note that a number of these are add-on options, and don’t come as standard.
Make sure to discuss your needs with your broker.
Rent Guarantee Insurance and Unoccupied Building Cover
Sometimes circumstances mean your tenants can’t pay their rent on time, or at all. This can happen for a variety of reasons (side-eyeing a certain virus) and if you have multiple properties, you may end up with multiple tenants in the same situation.
The circumstances and amount covered will depend on the individual policy. Policies usually only cover one property at a time, but some brokers will offer discounts if you insure multiple properties under one portfolio.
On the other side of the coin, sometimes you struggle to get the right tenants in, and you may end up with an empty property for a few months. Or maybe you’ve needed to renovate and simply can’t have a tenant in, or you have the property on the market and it’s taking longer than expected to sell.
Every month without a tenant means a financial hit to a landlord, plus the usual risks of having an unoccupied building: vandalism, potential property damage, and extreme weather events or fire can all raise your stress levels and keep you up at night.
Depending on your policy, some of the potential risk can be covered, leaving you free to get your tenancy situation sorted.
Building and Contents Damage Insurance
Let’s start this off with a couple of things not enough people know about:
- These insurance types do not cover your tenants belongings. It is for landlords who rent furnished or semi-furnished property to tenants and want to cover against damage and theft.
- Building insurance and Contents insurance are two different policies. Buildings insurance covers the building, and sometimes outbuildings. Contents insurance is for items like furniture, appliances, and for some policies, carpets.
Basically, contents insurance is in case the tenant’s dog eats the couch. Building insurance covers you in case the dog burns down the building.
Landlord Liability Insurance
Trips, spills and falls happen to all of us.
Buildings are hard, and humans are soft and squishy. Injuries can be caused by the building itself, fixtures, fittings, and even contents.
If it happens on your property, or someone else’s property is damaged, liability insurance covers you against compensation claims and legal fees, up to your policy limit. This could be from a tenant, a visitor, or a tradesman working on the premises – trips and falls are the most common workplace accident.
Injuries to yourself, your family members, and injuries caused by product defects are often not covered.
Landlord insurance is a tailored package. A landlord who owns a single property that’s being let out may have completely different expectations and needs to a landlord with five properties and an HMO.
This is where your broker becomes your new best friend; offering expert advice and solutions for your unique situation.
Once that’s sorted, you can relax slightly. At least until someone’s dog eats your couch.