Sally | Edited by Sam D
Updated January 2017
If you're one of the UK's two MILLION people who rents out a home to tenants then landlord insurance is worth considering. It's not compulsory but can prove useful, so we show you how to get it cheapest.
We've a host of tips to help you decide if it's right for you, including what it covers. Importantly, this guide is for residential landlords who rent out homes, not commercial landlords letting out offices or shops. It is also for landlords who let their homes for long periods (usually defined as six months or more), NOT for Airbnb-style short-term lets.
This is the first incarnation of this guide. Please tell us your experiences in the landlord insurance discussion.
In this guide...
Landlord insurance explained: The five need-to-knows
Landlord insurance is not compulsory think of it as souped-up home insurance to cover extra perils such as non-payment of rent or damage by tenants but it can be very costly to go without it if disaster strikes. Our tips help you decide if it's right for you.
If you're going to be a landlord, you won't be breaking the law if you don't take out specialist insurance. However, if you rent out a property to any kind of tenant and want to be protected in case anything goes wrong, standard home buildings and contents insurance usually won't cover you you'll need a landlord policy instead.
This is because insurers view the risk of renters living in your property and the chances of them making a claim on an insurance policy very differently to you, the owner, living in it instead. Two young students who enjoy socialising renting a flat, for example, pose a greater claims risk to an insurer than an older professional couple who own their property.
Also, there may be some cases where a buildings policy is not necessary. For example, if you own a leasehold property in a block of flats and rent it out, you could find the block freeholder has their own buildings insurance which should cover you in the event of any incident such as a leaking washing machine ruining your floor and the flat below's ceiling.
Yet not all freeholders will have a comprehensive buildings insurance policy so if you're in this situation, double-check.
Landlord insurance is usually an umbrella term given to different strands of cover bolted together for anyone who owns a home they rent out, and it's entirely up to you to decide what it includes, though the more you add the more it costs. These are your options:
- Buildings cover. To rebuild or repair your home if the structure is damaged.
- Cover for YOUR contents. If stolen by someone other than your tenant (see below as there's separate cover for this) or damaged by fire, flood and more. It will NOT pay out for a tenant's contents.
- Loss of rent. If tenants don't pay up or are rehoused if your home's damaged.
- Accidental/malicious damage or theft by tenants. If your goods or furnishings are stolen or damaged by tenants.
- Legal expenses. If you take action when dealing with tenant disputes.
- Public liability. If a tenant or visitor is injured on your property and claims against you.
- Property damage due to illegal cultivation of drugs. By your tenant, of course.
- Eviction of squatters. Where a tenant simply won't leave.
There are other points to watch out for too:
Membership of a landlord association is no replacement for cover
You may pay a membership fee for organisations such as the National Landlords Association. This gives you access to information helping out with issues you may have, provides a forum to discuss problems with other landlords and gives basic legal advice. But it's in no way a replacement for landlord insurance.
Consider contents cover if your property is furnished
Whether you include contents as part of your landlord policy could depend on how much furniture you have in the property and its quality.
For example, if it's basic furniture that would be inexpensive to replace, it may not be worth insuring. Likewise if you're offering the property completely unfurnished. However, if you're furnishing a property to a high standard, you may want to consider covering it against theft or damage.
Tenants' contents won't be covered under a landlord insurance policy so you may want to make that clear to them. It may sound obvious but many renters won't be aware of the risks and may mistakenly believe they're protected by you instead.
Own a leasehold flat? Buildings cover may already be included
Many landlords rent out a leasehold flat in a large building or housing block. In this common scenario, it's likely you'll pay a service charge to the freeholder, ie, the owner of the building your flat is located in.
If something happens to the building or its structure, the cost to rebuild or repair it will be covered by the freehold owner's buildings insurance. This effectively means you don't need a standalone buildings policy.
And buildings insurance policies taken out by the freeholder or a management company on behalf of leaseholders often cover structural damage even if the problem began in your flat as long as you weren't wilfully negligent.
For example, this should include the cost of repair if a pipe burst in your property or that of a neighbouring property and ended up doing serious damage to your walls or ceiling.
However, it'll be worth double-checking the precise nature of the buildings insurance cover for your block, to be safe it isn't always the case. Ask the freeholder for a copy of the document to be sure.
To qualify for a mortgage, you'll need some sort of buildings insurance
The majority of landlords will need a mortgage to buy their property and since almost all lenders insist on buildings insurance as a requirement before they'll give you the cash, you'll need a policy which includes it.
While landlord cover is not a must, it does include buildings insurance so will fit the bill. Normal buildings cover is enough to satisfy the lender but may leave you short as explained above.
Unsurprisingly, lenders want to know that, in the event of a property being severely damaged or even needing to be rebuilt, you've got a policy in place that'll pay out to do this.
If you're in a strong enough financial position to be able to buy a buy-to-let property without the need for a mortgage, buildings insurance is much less of an issue. But a policy will still be worth taking out as, without it, you'd have to absorb the cost of any repairs for structural damage.
Moved and renting out your old home? You'll need a new policy
There are growing numbers of accidental landlords those who marry and move into a partner's home and rent out their old one, for example, or who inherit a property and decide to let it out rather than sell.
Fail to let your insurer know (and, just as important, your lender!) and any claim on the cover would be invalid, since your existing home insurance policy won't be deemed valid because you've now got tenants in.
For convenience, you can ring your existing insurer which in most cases will simply 'upgrade' your ordinary home insurance policy into a basic landlord policy. It takes just one phone call and there'll usually be a higher premium to pay to reflect this greater risk.
But do this and you'll usually find your new policy won't include key landlord-specific extras such as loss-of-rent guarantee or public liability. Instead, you'll likely be better off looking for a specialist landlord policy from elsewhere that includes all the add-ons as well as basic contents and buildings cover. Ensure you get the cheapest deal by doing a comparison using our step-by-step guide below.
What if I become a live-in landlord and just let out a room?
Being a live-in landlord shouldn't have too much of an impact on your existing home insurance in most cases it won't need to change at all. Although you're essentially your lodger's landlord, your home insurer will tend to consider it much less of a risk because you're still living in the property.
Call your existing home insurer to let it know the change in arrangements. You may see your premium rise slightly but if it's happy, it may well keep the cost the same. Also, you can now earn £7,500 tax-free each year from letting a spare room, under the Government's Rent a Room scheme.
Got more rooms to rent out? If you're a live-in landlord and rent out several other rooms in your home to tenants, your insurer will raise the premium accordingly. However, you should still be able to keep your existing ordinary home insurance.
Insurers will ask what your tenants do (and may charge more if they're students or on housing benefit)
When you buy landlord insurance, you'll be asked what kind of tenant you rent to usually early on in the application process.
You'll generally be asked to choose from a dropdown box or to tick a box showing what type of tenant you have. These are the main categories you can choose from:
- Those in receipt of housing benefits
- Asylum seekers
- A mix of the above
It matters because the type of tenant you rent your property out to will have an impact on how much you pay for landlord insurance. Choose to let to students or those in receipt of housing benefit (and the unemployed) and you'll pay more.
This is because these groups' lack of income or low level of take-home pay means they're a higher risk to insurers, which worry you'll struggle to fill your rental property. In particular, you'll pay a much steeper premium if you want your policy to cover you for non-payment of rent.
Not every insurer is willing to cover all types of tenant but most will give you a broad choice of tenant categories. However, you must always make it clear to an insurer who it is you'll be renting to. Fail to do so and you could invalidate your policy.
Most policies will cover you for a claim if your property's left empty for a short period, usually 30 days handy if you're planning a quick renovation or kitchen overhaul. So if thieves broke in or your property suffered damage from a water leak, you'd get a payout.
But if you know the property is going to be sitting empty for several months for major works, say you'll need to tell your insurer and agree additional cover, or pay extra to take out a separate 'unoccupied property insurance' policy to add to your existing landlord cover.
If you don't, you could find yourself uninsured and out of pocket during that period if the property is taken over by squatters, vandalised or damaged by fire or flood.
These alarms should be on every floor of the property you're letting and you'll need to test them frequently. You also need to make sure the property is safe for tenants eg, having up-to-date building and electrical installation safety regulation certificates and carry out any necessary repairs.
Plus, you'll need to have all gas and electrical equipment checked regularly and ensure it meets safety requirements. Fail to do so and insurers can deem your policy invalid. Your tenants can then take you to court and you won't be able to use legal cover to fund the claim.
See a full rundown of your landlord responsibilities including keeping your tenant's deposit safe in a deposit protection scheme.
Use comparison sites to find the cheapest landlord policy for you
Once you've brushed up on the basics from our top five tips and decided landlord insurance is right for you, it's time to visit comparison sites for quotes. These sites zip your details to a number of insurers and brokers to find the cheapest. They don't all compare the same companies, so it's best to combine them.
Step 1. Use comparison sites a quick route for quotes but it won't find all providers
This is a quick and easy way to search for a policy that'll give you a decent benchmark for prices. But it'll only give you a sample less than half of the landlord insurance market which has more than 50 insurers and brokers.
Here are two of the biggest which compare landlord insurance premiums to get a speedy quotation. They don't search the same insurers so try both if you've time.
- Getting a quote takes five to 10 minutes
- Provides quotes for all types of tenant including students and housing benefit recipients
- Limited information at quotation stage
Please feedback on Comparethemarket.com
- Getting a quote takes five to 10 minutes
- Clear and extensive selection of tenants
- Edit function not smooth
Please feedback on Gocompare.com
- Getting a quote takes five to 10 minutes
- Clear and extensive selection of tenants
- Limited information at quotation stage
Please feedback on Confused.com
Step 2. Check the BIG insurers and brokers comparison sites miss out
Comparison sites let you compare insurers quickly, yet don't capture the entire market. Some insurers don't appear on comparison sites at all and some deals are only available by going directly to an insurer's website.
We've only included the biggies here but the broker section below will help you extend your search even wider. The following policies only cover employed tenants students or those receiving housing benefit won't be included.
Home & Legacy is a specialist provider offering two levels of cover entry level for new landlords and top level for professionals.
More Than is another household-name insurer to consider, and allows you to pay your premium on a monthly basis interest-free.
With Simple Landlords*, use the code EXPR10 to get a 10% discount. Accidental damage is provided free with buildings cover.
Step 3. Still struggling to find cover? Try a specialist broker
If you own an unusual property you want to rent out a flat over a shop, say, or many floors up in a tower block and are struggling to find cover, speak to a specialist broker that should be able to help. Try the British Insurance Brokers' Association's search tool or if you prefer, call its broker helpline on 0370 950 1790.
Step 4. Check your policy
Always double-check the policy terms. Once you've found the cheapest quotes to suit you and your wallet from the comparison sites and by going direct, make two important checks.
Double-check the quotes
Click through to the insurance provider's own website to double-check the quotes are suitable. Some comparison sites make a few assumptions (that might not be right for you) to speed up searches.
Examine the policy's cover to try to tweak the price down
While checking whether it's suitable, it's worth playing with the policy details to see if you can finesse the price down. For example, look at the excess, and see if any affordable adjustment here can trim the cost.
Step 5. Get cashback too
Once you know which your cheapest provider is, you need to check you're not missing out on any cashback deals. If your second or third cheapest quotes weren't much more expensive, see if cashback's available for them too, and find the overall winner.
It's important to be aware that the cashback is coming from the comparison site, not the insurer, so getting the cashback relies on its ability to pay.
Things you need to know before getting cashback...
Never count the cash as yours until it's in your bank account
Cashback is never 100% guaranteed. There can be issues with tracking and allocating the payment. Many cashback sites are small firms with limited backing, and you've no protection if anything happens to them.
Withdraw the cashback as soon as you're allowed
Money held in your cashback-site account has no protection at all if that company goes bust. Always withdraw it as soon as you're eligible.
Clear your cookies
While it shouldn't be a problem, if you've used comparison sites before, there's a minor risk that the cashback may not track due to 'cookies' on your computer so it's good practice to clear those first (read more about cookies).
If you're new to cashback sites, make sure you read our Top Cashback Sites guide for pros and cons before using them. Otherwise, use our Cashback Sites Maximiser tool to find the highest payer for each insurer.
How to make a claim on your landlord insurance
Claiming on your landlord insurance should be straightforward, and needn't be daunting. If you've read and understand the terms and excesses on your policy, you shouldn't be in for any nasty shocks. But in the event you need to claim, take two simple steps...
If it's a theft or serious damage to your property by unruly tenants, notify the police
If something's stolen from the property or it's badly damaged by misbehaving tenants, you'll need to get a crime reference number to make a claim. Report the incident to the police as soon as you can to make sure your claim doesn't hit the skids.
Submit your claim as soon as possible
Contact your insurer as soon as you can to avoid any administrative hold-ups; if it's a complex claim, it may take a while to be processed, so the sooner you start, the better.
How to complain about your insurance provider
The insurance industry doesn't have the best customer-service reputation and while a provider may be good for some, it can be hell for others. Common problems include claims not being paid out on time or at all, unfair charges, or exclusions being hidden in small print. It's always worth trying to call your provider first, but, if not, then:
Free tool if you're having a problem
This tool helps you draft your complaint and manage it too. It's totally free, and offered by a firm called Resolver which we like so much we work with to help people get complaints justice.
If the complaint isn't resolved, Resolver will escalate it to the free Financial Ombudsman Service.
Important: If your issue is about a voucher or incentive that was part of an MSE Blagged deal, instead just let us know by emailing email@example.com as that's usually quicker.