A Guide to Landlord Insurance – What Does Your Policy Include?

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:

  • Fire

  • Flood

  • Storm damage

  • Water leaks

  • Explosion

  • Earthquakes

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:

  • Tables

  • Beds

  • Sofas

  • Microwaves

  • Dishwashers

  • Washing machines

  • Wardrobes

Liability Cover

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.

Why Does Landlord Insurance Cost More than Home Insurance?

When you compare the cost of landlord insurance with regular owner-occupied home insurance, you will notice a striking difference between the two: The cost. Landlord insurance policies can cost up to 20% more than a home insurance policy.

At first glance, the two appear to offer the same thing. After all, both types of insurance cover both the building and its contents should the property be burglarized or damaged in a fire.

However, it’s the extra cover that landlord insurance offers that makes it more expensive than regular home insurance. This extra cover is also the reason why it is essential for landlords to get a landlords insurance quote and make an intelligent choice.

Liability Cover

One of the biggest differences between home insurance and landlord insurance is liability cover. Liability covers two types of claims that could potentially cripple a landlord financially.

To start, liability cover protects landlords should a tenant injure themselves while on the property. If a shelf were to fall down and hit someone on the head, the landlord would be covered. Second, liability covers claims made by those who hurt themselves while working on the property. This includes any tradespeople who may be performing maintenance, renovation or landscaping tasks on the property.

Liability cover is a big part of the reason why landlord insurance costs more, but it provides landlords with essential cover for expensive claims. Without it, investing in buy-to-let properties becomes far too risky.

Lost Income Protection

Most insurance policies for landlords also offer protection against loss if the property becomes uninhabitable. The property may no longer be suitable for tenants because of a damaging fire, flood or something as simple as a broken heating system. If a tenant is required to move out of the building, this cover will protect the landlord from lost income.

Building and Contents Cover

Much like home insurance, this type of insurance also offers building and contents cover. However, the details of the policy differ from a home insurance policy.

As far as contents are concerned, insurance policies for landlords will only cover the cost of any items that belong to the landlord. Renters will need to purchase their own insurance to cover their own belongings.

Building cover may include malicious and accidental damage. Should tenants damage the property, repairs may be covered by the insurance policy, saving the landlord quite a bit on out-of-pocket expenses.

Supplemental Cover

In addition to the standard cover offered by insurance companies, landlords can also add additional cover that will further protect their investment. These include:

  • Rent protection: What happens to landlords if their tenants stop paying rent? With rent protection, landlords will recoup lost rent money.

  • Lost keys: Some insurance companies also offer lost keys cover that will cover the cost of new locks, keys and locksmith services.

  • Home emergency: Home emergency offers 24/7 emergency services for home repairs. Tenants can call for repairs themselves, which makes it easier to maintain the property. This type of cover typically includes materials, parts, labour and call out charges. If necessary, it will also cover the cost of emergency relocation for tenants.

  • Legal expenses: Many insurance companies also offer legal expenses cover. Should a claim be filed against you, this will cover the cost of legal fees. This cover allows you to either pursue or defend legal action.

Risk Factor

There are many who believe that landlord insurance policies cost more simply because landlords are considered higher risk. While this theory has yet to be proven, it is easy to see why people agree with this train of thought.

In the eyes of the insurance company, landlords do not treat their properties as well as owner-occupiers do. Because of this, the risk of the property becoming damaged is much higher and the property will likely generate more claims.

All things considered, it’s easy to see why landlord insurance costs more than an owner-occupied home insurance policy. The added protection is vital for landlords, especially when it comes to liability.

At the end of the day, landlords face a greater number of challenges than regular homeowners, and their insurance policies should reflect that. With the potential for loss of rent, damage to the property and lawsuits, landlords need ample cover to protect their investment and their finances.

Landlord Insurance – From Filing a Claim to Fighting Rejections

Obtaining landlords insurance is not your final step to being fully covered. While insurance is paid for and active, you will still need to file a claim when an incident occurs. Furthermore, once a claim is made, you may face a rejection, which can be a very lengthy legal battle to get the coverage as stated within your policy.

Landlords need to know how to file a claim and what they need to do if a claim is rejected.

Validate the Claim

Assess your claim before making a claim. This is done by assessing your damages and verifying that your current landlord insurance provides coverage for the claim you will be making. This may seem unnecessary, but it will save you a lot of time and paperwork to know beforehand.

Once you know that a claim is valid, you will need to follow through with making a claim and documenting everything that led to a claim being made.

Make the Claim

Making a claim is extremely easy. Simply call your insurer and ask to speak to the claim’s department. This will take some time due to being on hold, so if you are in a rush, you can go to your insurer’s website and they may provide a means of filing a claim online. This is the fastest method of making a claim and comes with no long waits on the telephone or dealing with disgruntled agents.

Be prepared to write a full description regarding the claim. The more detailed and thorough you are when filing, the better chance of a claim being approved and the funds being quickly dispersed.

Tips When Filing a Claim

Landlord insurance claims are easy to file, but you will want to follow these tips to make sure that you do everything right before a claim is processed.

  • If an unrepaired incident can cause further damage, make the arrangements to fix the damaged area so that no further damage occurs. If a broken pipe is leaking, you cannot let it continue to leak as this could invalidate a claim. Temporary repairs should be made promptly to halt further damage from occurring. Repairs, however, will not be covered if they are made without consent of the insurer.

  • Claims must be filed with haste. The earlier you file a claim, the better chances you have of acceptance. If you wait too long, typically 30 days, you may not be able to file a claim any longer.

Rejected Claims

There are times, especially when costs are very high, that a claim will be rejected. In the event that this occurs, you, as a policyholder, have the right to fight rejected claim. This must be done with the utmost care because you will not have many chances to fight a claim.

Hire a Professional

Rejections are on the rise, and you may very well be rejected if your claim is for several thousands of pounds. You cannot handle a rejection on your own with success. You will need help to have the rejection overturned and this can be done by:

  • Going to the CILA and finding a loss adjuster to represent you

  • Hiring a chartered surveyor

These are the two resources that will prove to be invaluable when trying to fight insurance companies that refuse to approve a valid claim. You will also want to contact your insurance broker directly. As a client, the broker will work with you through the entirety of the rejection process and often provide you with a means of overturning a rejection.

While most landlord insurance claims are accepted, you will need to worry about a rejection when a claim is more complicated. The goal is always to document everything, take pictures and seek help immediately after a claim has been rejected. The longer you wait to have a claim rejection overturned, the more difficult it will be to proceed.

Fighting through a rejection can take years in severe cases, but with the proper assistance, you will be able to receive the money needed to remedy the claim that you deserve from the insurer. A rise of 12 percent more rejections has been documented over the past few years. Acting swiftly and being persistent will help you win your claim.

Choosing the Correct Landlord Insurance

Owning a rental property is a business. When you make income from an asset, you need to safeguard this asset, or investment, so that it continues to make you a steady income. When tenants are present, you need to have the appropriate landlord insurance policy so that if any damage occurs to your property, you will have insurance to cover the costs of repairs or replacing items.

Unfortunately, it is not just enough to secure insurance. If you want to truly safeguard your investment, you need the right insurance for your needs.

Let’s discuss what it means to have the right landlord insurance in place when your tenants move in.

Furnishing Provisions

Properties may be let with furnishings and without furnishings. The problem is that most policies are tailored for properties that do not have furnishings. This means that if an item is broken by a tenant, you will not be reimbursed the cost from your insurer.

While you will not be able to receive compensation for a couch or television, you must ensure that your policy has:

  • Provisions for fixtures

  • Provisions for fittings

These items are essential and will include the following:

  • Flooring

  • Windows

  • Light fittings and fixtures

  • Curtains

These are items not deemed furnished but that can be very costly to replace and often break during a tenant’s stay.

For anyone that has a full furnished property that is filled with a television, living room furniture, beds and the like, the next section will provide you with all the information needed to protect your property.

Contents Cover

Furniture is deemed contents and will be a separate insurance or an addition to most landlord insurance policies. This will be included within many policies, but it is not a requirement. You must ensure that your policy offers contents cover or that you take out a separate policy to cover items, such as:

  • Televisions

  • Couches

  • Microwaves and toasters

  • Beds

This cover will have a limit, so you must estimate the total cost of all contents you want to include. Oftentimes, provisions are made for repairs and replacements which must be considered. Many insurers will not replace items that are over 5 years old, so make a note of each provision listed.

Your current insurer may offer this within regular policy, so ask your representative what they offer and scour your policy to see if you already have adequate cover.

Loss of Rent Cover

Most landlord insurance policies will include loss of rent cover, but this does not mean it is a required addition to a policy. Loss of rent allows you, the landlord, to recuperate some of the rent lost in the event that the property has become damaged or deemed uninhabitable.

Loss of rent cover is often provided with the following provisions:

  • A minimum of 20 percent reimbursement

  • A maximum of 30 percent reimbursement

Loss of rent cover provisions should be a part of your policy. Ask your representative or look through your policy papers to determine if you currently have the loss of rent cover that you need.

Legal Expense Cover

This is not included in most policies, but it may be offered by your insurer as an addition. Legal expense cover allows you to have the financing needed in the event that a tenant will not leave the property or a legal issue arises that involves the need of a solicitor.

No one can be sure of the actions of their tenant, and if you must go to court and require a solicitor, the expense may be too high to cover.

Legal expense cover is one of the most important additions a policyholder must have before letting a property.

Speaking to a qualified insurer is the first step to securing the correct landlord insurance for your needs. If you are a new landlord or one that has been letting properties for years, a little help and guidance may mean the difference between your investment being profitable and losing money due to an insurance policy oversight.

Never be afraid to read through your insurance policy and ask any pertinent questions you may have to your insurer. The better your understanding of your policy, the lower your risks will be.

More information can be found at iinsure365.co.uk.