Updated 07 January 2022
If you’re planning to buy-to-let, you’ll need special landlord insurance. Landlord insurance is really a collection of different types of insurance, some of which are compulsory for buy-to-lets, some of which are just good to have, and several that are highly advisable.
Here you can find out about your insurance obligations as a landlord, and how best to use insurance to safeguard your buy-to-let business.
Buy-to-let properties aren’t covered by normal home insurance, since they carry more (and different) risks. Therefore you will need special types of insurance designed for landlords. These will cover the same general risks as ordinary home insurance (e.g. fire, flooding and subsidence) but it also protects you against damage caused by tenants, unexpected legal costs and loss of rental income.
There is no one type of insurance called ‘landlord insurance’ – rather, it is a whole range of insurance types that are specifically geared to landlords. Exactly what is covered by your insurance depends on the policies you take out – and there are lots to choose from.
Different types of landlord insurance policy protect against different risks. Along with compulsory buildings insurance (to protect the structure of the property itself), you may want to take out cover against:
There are some policies that you really do need to have, like buildings insurance.
In fact, some mortgage providers will only give you a buy-to-let mortgage you once you confirm that you have certain policies in place.
Firstly, you might need it to secure your mortgage. But it’s also wise to have a level of cover that balances out financial risks you may be taking.
Can you really afford to replace all the furniture out of your own pocket if there’s a fire? Is the rent vital for your own income, or is it a supplement that you can afford to lose? What if someone becomes seriously injured due to a fault at the property – can you cover the legal fees to help protect yourself? You need to weigh up how much you can afford to lose if something goes seriously wrong.
Yes, it doesn’t matter who you’re renting to – every tenant poses a risk. Anyone could injure themselves in your property or accidentally cause damage. You may find, though, that the premium is lower if you’re renting to a family.
Yes. If you pay a maintenance fee, check whether this provides you with any cover, such as buildings insurance. You can then add on the other policies you feel you need.
It depends on what you can afford to lose if there was damage, not just caused by your tenants, but from events like fire, flooding and theft.
If you’re providing furniture and white goods, the cost of replacements can be high.
Here is a simple breakdown of the landlord insurance must-haves, should-haves and nice-to-haves.
If you own more than one buy-to-let property, you may be able to get one policy to cover them all, which can be much easier to manage. One policy can cover as many as 15 properties initially, and you may be able to add more during the term of your policy. Whether or not it is cost-effective to do this may depend on how similar the properties are; if one poses significantly higher risks than others, for example, then it may be best to cover that one separately.
The cost of your landlord insurance will depend on the property itself, the types of tenants you’ll be renting it to and how much you choose to protect. Naturally it will be more expensive if you go for the maximum cover level with the minimum excess option.
As a rule of thumb, you can expect to pay upwards of £150 a year or £15 a month for a fairly solid policy. It’s important you have the right level of cover to protect you, but there are ways to reduce your premiums without affecting your cover, such as:
Finding the right policy starts with shopping around. The best way to do this is to consult a financial adviser or mortgage broker who specialises in this kind of insurance. They can search the whole of the market to find you the best deals, providing a more custom-made level of cover that can result in significant savings. A mortgage broker can also help you find the best buy-to-let mortgages.
If you already have landlord insurance, it’s worth shopping around again when the end of your current policy is approaching. Whether or not your situation has changed, you may be able to get a better deal by switching provider.
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