Few subjects inspire boredom more than insurance. Yet in some cases, it’s a legally required step in a business’ ownership. Even when you opt for insurance, it’s not always clear what you are or are not covered for as few people read all the small print.

What is Landlord Insurance?

There are many different types of landlord insurance to cover you for almost anything related to your rental property business. Despite what insurers might tell you, there is no such single product as “landlord insurance”. There are, however, different types of property insurance products suitable for landlords that will cover different aspects.

Insurance is not compulsory for landlords unless you presently have a mortgage on the BTL property. This isn’t the law though. It is usually a requirement of the mortgage lender that you have a certain type of insurance before permitting tenants to move in.

I’m Considering Landlord Insurance. What Should It Cover?

Buildings

As with homeowners, this protects the physical aspects of the home – the structure, foundations, walls, bricks etc. At a most basic level, you should have this.

Contents

As a BTL landlord, you generally will not need contents insurance which protects the physical items inside the building. It is advisable for some fully-furnished properties, but rarely worth it for student HMOs.

Landlord Liability

This is one of the first and most important insurance types for property owners. Designed to protect against claims by a third party such as a tenant. If – through no fault of their own – a tenant has an accident and their property is damaged, they could sue. This is one type that mortgage lenders might insist that you take out.

Loss of Rent

An optional insurance, sometimes it is a bolt on but increasingly a policy on its own. Usually covers rent payment in the result of eviction so not always worth it if your tenants are students. Check the exclusions as some types of reasons for non-payment aren’t covered.

Tenant Default Insurance

While loss of rent covers evictions, this may be more suitable for you. It’s usually a bolt on too, covering against rent arrears. There is usually a stipulation that it covers up to a certain rent value and for a number of months. This is more suitable if you have student tenants on those occasions where they didn’t get their loan on time.

Things to Note

• Your property is not covered “come what may”. There are always limits so read the small print before signing up
• Multiple excesses. For example, a mandatory and then a variable voluntary. There might also be separate smaller excesses for certain claims
• How much excess you pay might also depend on the type of job (based on cost)
• Finally, always check the small print before signing up