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Why Landlord Insurance Is Vital for Investors

When you take on a property investment, there’s a good chance you’ll regularly hear the term due diligence. This refers to the steps that should be taken throughout your investment process and relate to both administrative duties as well as the research you’d undertake.

Aside from the usual tax considerations, admin costs and other financial fees that need to be taken into account, landlords would be wise to opt for landlord’s insurance, even if you’re investing in a UK property from overseas. Landlords insurance helps protect you, your property and your tenants as it covers activities that a conventional home insurance policy wouldn’t.


Landlord Type of Coverage

There are three main types of insurance that a property investor should consider:

  • Landlord Insurance (the previously mentioned type that includes Building Insurance, Contents Insurance and Public Liability Insurance)
  • Landlord Emergency Cover
  • Rent Guarantee Insurance

Landlord Insurance

The first of these – Landlord Insurance – is the most common type of insurance and should be generally considered. Most lenders will ask you to take out a specialist landlord policy and they typically include Building Insurance, Contents Insurance and Property Owners’ Liability Insurance.

Building Insurance is the central component of Landlord Insurance and means that your property will be protected. This type includes permanent fixtures and fittings including fitted cabinets, bathroom fixtures and other items that can’t be easily picked up and moved. Building Insurance will typically already be owned by the freeholder, so make sure to check your lease or speak to the person directly to ensure you understand where you stand.

Contents Insurance covers any part of your house and belongings that can easily be moved. While this obviously includes items such as kitchen appliances and furniture that isn’t considered a tenant possession, it also includes carpets and curtains. This means even if you’re letting out an unfurnished property, it might be worth taking out this type of cover. Always make it clear to your tenants that Contents Insurance doesn’t cover their possessions.

Finally, Public Liability Insurance covers the costs of any accident that occurs on the premises – such as legal costs and potential damages.

Landlord Emergency Cover

This type of policy will generally cover emergency repairs to a property that may have major health implications for tenants. This can include things such as: boiler repair, plumbing repair, electrics or infestations. Typically, with this type of cover, insurers will provide a 24-hour hotline that can be passed on for tenants to use.  

Landlord Emergency Cover is particularly useful for self-managing landlords as it adds another way tenants can handle issues themselves by speaking directly to the insurer. If you’re using a managing agent, this type of policy will be less about saving time but will help to cover any repair costs.

Rent Guarantee Insurance

Particularly useful for Buy-to-Let landlords, Rent Guarantee Insurance covers the rent if your tenant defaults on the payment. This can happen to anyone so it can be useful for landlords to protect themselves – just remember to check the excess and gather the necessary tenant references.

Landlord Insurance Considerations

While landlord insurance isn’t a legal obligation, a standard home insurance policy won’t typically cover Buy-to-Let activity. In this situation, when you take the mortgage out on your property, it’s very likely that a lender will require you to take out specialist insurance before taking on tenants.

If you’re renting out your property, it’s important that you check with your provider how your building insurance and landlord insurance will co-exist during the investment. Usually, you’ll need to take out a specific landlord insurance policy that includes building insurance, so you can ensure it’s definitely valid. In other cases, it may be possible to amend existing building insurance to cover your rental activities.

Finally, if you’re letting an apartment, there may be some extra steps in the process. Make sure to check your lease or speak to the freeholder regarding the Building Insurance for the property. You may still choose to take out private insurance for things like contents and public liability to be safe. If you’re organising the building insurance, make sure that you get a policy that covers Buy-to-Let activity specifically.

As a landlord, it’s important that you protect yourself, your investment and your tenants. If you’re looking to build long-term growth through a UK property, ensuring you have the best insurance can mitigate any challenges down the line and ensure you’re building consistent wealth. As always, speaking to a trusted partner can be incredibly useful in ensuring you get the protection that you need.

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