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Landlord insurance
Get cheap cover if you're renting out a property
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.
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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.
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It is NOT a legal requirement but without it you may not be covered if you have tenants
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.
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Landlord insurance is souped-up home insurance, covering all the usual plus tenant issues
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:
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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:
- Employees
- Students
- Those in receipt of housing benefits
- Unemployed
- Self-employed
- Asylum seekers
- Retired
- 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.
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You'll need extra cover if the property is left vacant for more than 30 days
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.
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You MUST provide smoke and carbon monoxide alarms – if not, you may invalidate your policy
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.
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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...
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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.
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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.
What to do if something goes wrong
First, you need to complain to your insurance company directly. If it doesn't respond, or if you don't like what it says, then you don't need to just take it.
You can escalate your complaint to the free Financial Ombudsman. The ombudsman is an independent adjudicator which will make the final decision on a claim if you are locked in a dispute with your insurer. For more on how to make a complaint, read our Financial Rights guide.
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