Just 40 years ago, there were only a couple hundred thousand landlords in the UK. Today, there are more than 1.5 million. As the number of landlords have increased, so have the number of insurers offering landlord insurance.
At one time, this sector of the insurance industry was much smaller and only comprised of specialist brokers and insurers. Now that the market has expanded, larger and more well-known insurance companies are now offering landlord insurance policies. A more competitive market often means better rates and better cover for the insured. Let’s take a look at what a standard policy offers and additional cover options that offer even more protection.
Buildings and Contents Cover
Buildings and contents cover are typically included with any basic policy.
Most policies will cover the following:
In addition, policies will typically cover both accidental and malicious damage. Accidental damage is any damage caused by tenants unintentionally. Malicious damage, on the other hand, is any intentional damage caused by the tenant.
Contents cover is particularly useful for landlords that offer fully or partially furnished properties. This only covers any items that you, as the landlord, own. Renters will need to acquire their own insurance to cover their belongings.
Items that may be covered under contents cover include:
As a landlord, it is your responsibility to ensure that your property is safe for tenants and anyone entering the property legally. Liability covers you if your tenant is injured while on your property, or if a tradesperson is hurt while working on your property.
Liability will cover the cost of legal fees associated with any public liability claims. These claims can be incredibly expensive, with some reaching as high as one million pounds.
Loss of Rent and Alternative Accommodation Cover
Most policies also include loss of rent cover with a standard policy. Loss of rent would cover the loss of income should your home become uninhabitable due to fire or flood damage.
Alternative accommodation cover is sometimes included in a standard policy, but some insurers will only offer it as an add-on. Should a tenant need to vacate the property while repairs are being made, alternative accommodation will cover the cost.
Rent Guarantee Cover (Add-on)
Rent Guarantee cover is offered as an additional insurance product, but most landlords feel that it is well worth the extra cost. Should a tenant stop paying rent, this insurance will cover your lost income.
With an uncertain economy and high unemployment rates, tenants are far more likely to be delinquent on their rent payments. With this type of insurance, landlords can enjoy a little peace of mind knowing they will still receive their rental income even if their tenant stops paying.
Depending on the insurer, Rent Guarantee may cover:
Loss of rent protection. If your tenants should stop paying, you will be insured for a maximum of the duration of the tenancy agreement (typically 6 or 12 months).
Legal fees associated with the eviction process.
Any costs associated with using an eviction agency to complete the necessary paperwork to evict tenants.
Legal Expenses and Home Emergency (Add-on)
Many insurers also offer cover for legal expenses and home emergencies, but both of these insurance products must be purchased separately.
Legal expenses insurance will cover any legal fees should you pursue legal action against a tenant or need defense against legal action taken against you.
Home emergency insurance will provide your tenants with 24/7 access to a repair helpline connected to a network of professional tradesmen who will take care of repairs. This saves you from having to call a plumber or other repair man in the middle of the night.
The cost of your premiums will largely depend on where you are located, how big your property is and your tenants. For example, many insurers will charge a higher premium for landlords that rent to students. In fact, there are still a large number of insurers that simply will not offer insurance to student landlords because they feel it is too risky.
The insurance products listed above are some of the most basic cover options offered by insurance companies. Many offer additional insurance products that help round out your policy and offer even more protection. It’s important to keep in mind, however, that additional cover options will increase your landlord insurance premiums.