What Insurance Does a Landlord Need?

As a residential landlord, understanding landlord insurance is essential. While it is not a legal requirement, insurance can help you to protect your investment property and your business against a range of risks, damages and unforeseen problems. In this guide, the expert landlord solicitors at Percy Hughes & Roberts explain exactly what type of insurance a landlord needs.

Being a landlord comes with a number of responsibilities, including managing the property, finding tenants, and ensuring that everything runs smoothly within. One of the most important aspects of your role as a landlord is protecting yourself, your property and your tenants from potential risks with the right insurance coverage.

With so many different insurance options available, it can be difficult to know exactly what type of coverage you require. In this guide, we will take a closer look at the types of insurance that landlords typically need to protect their rental properties.

We'll explore the key features of each type of coverage, as well as the potential risks and liabilities that they can help to mitigate. By the end of this guide, you should have a better understanding of why you need landlord insurance and what type of policy you should have to keep your property and your tenants safe.

If you have any questions we have not answered, our specialist landlord solicitors are happy to speak to you to answer any questions and provide the legal services you need. You can contact us by completing the enquiry form below or by calling 0151 666 9090.

What is landlord insurance?

Landlord insurance is a type of specialist insurance policy designed specifically for people who own rental properties. Typically, landlord insurance covers a range of options to help protect the property and its contents against damage, theft, and other risks, as well as providing liability coverage in case someone is injured on the property.

Specialist landlord insurance policies can also offer additional benefits such as covering the loss of rental income, legal expenses insurance, and emergency assistance services.

In this way, this type of insurance often functions as a combination of policies, and may contain elements of buildings insurance, contents insurance, rent guarantee insurance and landlord liability insurance. You may be able to customise your policy to add legal expenses cover or other types of insurance that you feel you need.

Is landlord insurance a legal requirement?

No, landlord insurance is not a legal requirement in the UK. However, some mortgage lenders may insist that landlords have landlord insurance as a condition of their mortgage agreement.

Even though landlord insurance is not compulsory, it is highly recommended for landlords to take out a policy. This will protect their rental property and reduce their financial risks, which can otherwise be significant. Standard home insurance policies may not provide sufficient coverage for rental properties, which means that without proper insurance, landlords could be liable for costly repairs, legal fees, or damages caused by tenants.

Therefore, while landlord insurance is not legally required, it is an essential consideration for any landlord looking to protect their investment and limit their financial liabilities.

What should a landlord insurance policy contain?

Finding a specialist landlord insurance policy that suits your needs best will depend on the specific risks you wish to cover.

For example, you may want to safeguard your building against damage or protect yourself against housing disrepair compensation claims. Additionally, you may also consider coverage that protects you against legal expenses, losses during periods where your property is unhabitable, losses when your property is vacant, and other potential risks that could impact your rental property.

These factors will differ in each case. If you are leasing a furnished property to your tenants, you may need contents insurance cover; if not, you may not need these. Consider what your policy needs to cover and what is on offer before you buy landlord insurance.

To make the best possible decision - and because rental properties and circumstances will vary significantly - it is important to understand the different types of cover. We explain the different types of cover below.

What is covered by landlord insurance?

Landlord insurance typically covers various types of risks associated with owning a rental property. Here are some of the most common types of coverage that a landlord insurance policy may offer:

Building and Contents

Normal home insurance policies cover your building and its contents. However, they won’t cover damage caused by a tenant. Landlord building and contents cover protects you from the cost of repairs, rebuilding the property and/or replacing any damaged or stolen contents caused by a tenant. They will also cover you for events such as fire, flood, or theft.

Public Liability

This covers legal expenses and compensation claims made by third parties, such as tenants or visitors, who are injured while on your property. When you have property owners' liability cover, you are insured up to the advised amount. If you do not have enough coverage, you may be responsible for paying any remainder out of your own pocket. This could result in significant expenses, particularly if you face a compensation claim made by your tenant or their visitors. For this reason, it is important to be realistic when evaluating different types of landlord insurance.

Loss of Rent

The two main reasons landlords may experience a loss of rent are:

1. Tenants being unable or refusing to pay rent, and
2. The property becoming uninhabitable due to an event such as a fire or flood.

If you are seeking protection for both of these possibilities, you will require rent guarantee (which covers tenants not paying) and rent protection (which covers uninhabitable properties). Some insurance providers will only offer one or the other, whereas some will offer both policies.

Legal Expenses

In addition to public liability cover, you may wish to add legal protection to your landlord insurance policy.  

This covers the cost of legal fees and expenses incurred in legal disputes relating to the rental property, such as eviction proceedings or property damage claims. Even if you have a good relationship with your tenants, there is always a possibility that a legal dispute could arise.

Unoccupied Property Insurance

If you expect your rental property to remain unoccupied for a significant period of time, it may be worth considering unoccupied property insurance.

Unoccupied property insurance can be especially useful if you have recently acquired the property and are still searching for tenants, if you rent to students who leave during university breaks, or if you frequently experience gaps between tenancies.

How much is landlord insurance?

The cost of landlord insurance can vary depending on several factors, such as the level of coverage you require, the type of property you are renting out, and the location of the property.

Generally, landlord insurance is more expensive than standard home insurance because it provides more extensive coverage.

It is important to shop around and compare policies from different insurers to ensure you are getting the coverage you need at a reasonable price.

Who pays building insurance: the landlord or tenant?

In the UK, it is typically the landlord's responsibility to pay for building insurance.

Building insurance covers the structure of the property, including the roof, walls, floors, and foundations. It is designed to protect the landlord against financial losses caused by events such as fire, flood, or storm damage. As such, it is the property owner's liability and the landlord will usually be responsible.

However, tenants may be responsible for insuring their own possessions within the property, as these are not typically covered by the landlord's building insurance. This would typically be covered under contents insurance which would be the tenant's responsibility to obtain if the property is unfurnished.