- Do I need Landlord Insurance?
- A landlord’s responsibility
- What does Landlord Insurance cover?
- Landlord buildings insurance
- Contents cover for landlords
- Property owner’s liability insurance
- Public liability
- Home emergency
- Accidental damage and malicious damage
- Unoccupied property
- Cover for loss of rent
- Cover for legal expenses
- Alternative accommodation
- What is the difference between Landlord Insurance and Home Insurance?
Letting property can be lucrative, but it’s a business packed with hurdles and risks. Insurance cover is important. But taking out landlord insurance for the first time throws up many questions, from legal requirements to whether cover is necessary when renting out a room only. Read on for our guide to landlord insurance for dwellings.
Landlord insurance covers a property owner for the risks associated with letting any part of a property as a dwelling. This includes a house or apartment as well as a floor, room or annex within the property where you reside.
A landlord insurance policy can be an all-in-one package, providing building and contents cover in conjunction with the extra cover required by a landlord, such as public liability and loss of rent. Alternatively, if a property is already protected by a basic building and contents policy, additional landlord insurance can be purchased to provide the necessary cover not included by your existing insurance.
Do I need Landlord Insurance?
Landlord insurance is not a legal requirement, but it’s recommended. A normal home insurance policy for a property that accommodates tenants will not be valid in the event of a claim.
In situations where a mortgage is being taken out on a buy-to-rent property, landlord insurance will usually be a requirement of the lender. So, although landlord insurance is not required by law, you will likely need to have a policy in place as a condition of your mortgage contract.
A landlord’s responsibility
Section 11 of the Landlord and Tenant Act 1985 says that it is the landlord’s responsibility to:
- keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes)
- keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity)
- keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.
What does Landlord Insurance cover?
The multiple elements of landlord insurance can be selected in a kind of pick-and-mix fashion, and tailored to the property owner’s needs.
Below are some of the basic risks covered by landlord insurance:
Landlord buildings insurance
Landlord building insurance should include fixtures such as bathroom furniture and tiled floors. It’s also advisable to add malicious and accidental damage (see below) to this part of a landlord insurance policy.
Some landlords are lease-holders, sharing a building – and building insurance – with other landlords or owners, for example in a block of flats. In these cases, the landlord insurance policy should specify the fixtures and fittings for which the property owner is responsible.
Contents cover for landlords
In a furnished or partly furnished property, it’s a good idea for the landlord’s contents to be insured. However, tenants are responsible for their own contents insurance.
Property owner’s liability insurance
Liability insurance covers the landlord for adverse domestic events such as fire, flood, electric shock, and accidents due to the fabric of the building (stairs, floors, door sills, etc).
In order to make a claim, the landlord must be able to demonstrate due diligence. The property’s gas installation must be checked every 12 months; the plumbing installation every two years; and the electrical installation every five years. For landlords, a gas safety certificate (CP12) and an electrical installation condition report (EICR) are both enforced by law.
Public liability covers a landlord for claims made by visitors to the property – for example, friends of the tenant or tradespeople.
Home emergency cover is for events that need immediate action or resolution, such as a gas leak, broken window or faulty boiler. Dealing with a serious problem immediately can save both the tenant and the landlord a great deal of inconvenience and expense. If a landlord can’t engage a professional person to sort out a problem immediately, there could be a need for temporary re-accommodation, or a tenant might take legal action against the landlord.
Accidental damage and malicious damage
Malicious damage is not usually an element of cover in its own right, but can be included in the building or contents parts of landlord insurance. It’s important to know exactly what type of malicious damage is included. Usually, this cover only applies to damage done by a person who does not have a legal right to occupy the property – for example, a tenant’s visitor, a former tenant, or a random vandal – but a landlord can opt for the additional protection of malicious damage carried out by tenants.
Accidental damage is not usually included in building and contents insurance, so it’s a good idea to incorporate this cover into a landlord insurance policy. This includes one-off events, such as a carpet stain or a broken TV, that were accidental.
A rental property can be unoccupied for many reasons. During a period of vacancy, a landlord will be standing charges on utility bills and possibly expenses associated with upkeep or repair. The building is also at risk from criminals who may see the building as an easy target. Unoccupied property insurance will cover the building and contents for extended periods where there is no tenant – standard home insurance policies usually cover about 30 days without occupation.
Cover for loss of rent
Sometimes, for some reason, a tenant doesn’t pay rent. Whatever the outcome of the problem, there’s a temporary loss of earnings for the landlord, especially as most will still be paying a mortgage and other bills. In some cases, the accrued debt will never be paid. Cover for loss of rent protects the landlord while there is no income.
Cover for legal expenses
If a dispute between the tenant and the landlord is the reason for a tenant not paying rent, there might also be the issue of legal proceedings. Rent protection and legal expenses can be factored into a landlord insurance policy.
If a rental property is legally uninhabitable, according to the Landlord and Tenant Act 1985, it’s the landlord’s responsibility to provide the tenant with suitable accommodation. This might be achievable through carrying out emergency repairs to the existing dwelling. In some cases, though, it might be necessary for the landlord to provide temporary re-accommodation for the tenant.
What is the difference between Landlord Insurance and Home Insurance?
The difference between landlord insurance and home insurance is the difference between insuring your business and insuring your home. A let property isn’t covered by home insurance, because it’s not the owner’s home. The property needs to be insured for the risks associated with selling a service – even if, in this instance, the risks of domestic life are also included.
In the family home, when there’s no hot water, or the toilet won’t flush, it’s inconvenient, irritating, and upsetting. In a rental property, this is a contravention of the Landlord and Tenant Act 1985. It’s also a contravention of a tenancy agreement.
What if I’m letting out one room in my own home?
In this situation, it’s important to adjust your existing home insurance cover. If a claim is made on a policy that does not declare a paying tenant, then the policy will be invalidated.
Call Adrian Flux on 0800 369 8590 and talk to an expert who will guide you through the process of creating a tailor-made landlord insurance policy.