Understanding Landlord Insurance: Protection for Property Owners

Sunday, May 14th, 2023

Most landlords we talk to are aware of ‘landlord insurance’ – but we encounter many different views on what it is; what it covers; and why you should take it out.

Ensuring that you and your rental property are protected from unexpected or unfortunate events is a really important consideration for all landlords. However, navigating the ever-expanding range of landlord insurance options available on the market can be a minefield.

If you’re renting a property in Hitchin or Hertfordshire, we’ve outlined the different types of landlord insurance that you should consider. Whether you’re reviewing existing policies or taking out new cover, it’s very important (if a little dull!) to read all the small print. Depending on the insurer, policies will have very specific terms and conditions and varying levels of excess payments. It’s better to be familiar with these now, rather than when you need to make a claim!

Here are the key types of insurance that all landlords should consider:

  1. Buildings insurance to protect against damage to the structure of your property. This includes damage or loss caused by theft, fire, flooding, natural disasters, or vandalism. Policies should incorporate damage to built-in features (such as fitted kitchens and bathrooms) and the cost of any repairs.
  2. Contents insurance to cover damage or losses to carpets, curtains, and furniture. Please note that landlord contents insurance will not cover any tenant belongings (your tenants should arrange cover for their belongings independently – and this isn’t your responsibility!).
  3. Rental income protection to protect against financial loss incurred if your property becomes uninhabitable due to an emergency (think burst pipe!). This insurance covers lost rental payments accrued whilst any repairs take place. If a potential rent gap of several months causes you concern, this type of protection is an important consideration.
  4. Rent guarantee insurance to cover any loss of income if a tenant fails to pay their rent. Even reliable tenants can encounter unexpected financial difficulties and it can take up to six months to evict tenants unable to pay rent. Should this situation arise, rent guarantee insurance (or tenant default insurance) covers lost rental payments for six to 12 months. A legal expenses clause is important too – as landlords often incur the legal costs involved in evicting a tenant.
  5. Legal expenses insurance to cover legal costs (set at a limit) arising from any dispute with tenants or other parties, in relation to the tenancy agreement or contract.
  6. Public liability insurance to cover any legal liability if a tenant, guest or third party takes you to court due to an issue relating to your rental property. Again, this covers the cost of lawsuits and legal expenses and is usually set at a maximum limit.
  7. Unoccupied property insurance is specifically designed for properties that are empty for extended periods of time (typically for 30 to 60 days). This might occur if you’re renovating a property or if you struggle to find a suitable tenant. The additional cost of this insurance reflects the increased risk of break-ins, vandalism, leaks, fire and other potential issues in an unoccupied property.
  8. Home emergency insurance offers 24/7 access to emergency repair services for electrical, heating or plumbing issues. 

A few things to think about…

Getting the correct tenant references and credit checks in place when setting up a tenancy agreement is paramount. If you fail to do so, insurers can argue that the tenant was unsuitable and refuse to pay out against any claims.

It’s also worth knowing what landlord insurance policies typically don’t cover, such as tenant belongings, general wear and tear on buildings or contents, or deliberate damage caused by tenants. Pets are an additional risk to think about. If it’s relevant, you might want to add pet damage to your buildings and content insurance policies (usually for an extra cost) to protect against any damage caused by pets.

So, what is landlord insurance?

As you can see, there’s no such thing as a ‘landlord insurance’ package that neatly fits every situation. Choosing which combination of policies to take out is a question of weighing risk against the cost of monthly insurance premiums and considering your wider situation.

Buildings insurance is a must (and usually compulsory if you have a mortgage) and we always suggest finding a policy that includes rental income protection in case your property is rendered uninhabitable. Legal expenses coverage is also high on our list, simply because legal costs can rise rapidly during tenancy disputes. And… if your monthly budget allows, rent guarantee insurance is a savvy move, especially if a prolonged rent gap would cause you a significant financial headache. Having peace of mind that you’re covered is (almost!) priceless.

M A S O N S is a leading letting agent in Hitchin, covering rental and buy-to-let properties in Hertfordshire. Founded on award-winning lettings experience, we specialise in property management, buy-to-let in Hitchin, and residential lettings – so if you want to talk landlord insurance, then drop us a line at 01462 557 477 or [email protected]

Please note: this article should not be interpreted as legal or financial advice. It’s vital to carefully read and understand the terms and conditions of any landlord insurance policy before purchasing to ensure it meets your specific needs and requirements.