Landlord Insurance Covers – Is It Worth It?

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It is commonly known there are risks associated with being an investment landlord.

A way that many landlords opt to help alleviate these concerns are by taking out relevant covers and/or insurances to help in the case they fall into issues.

But are these covers really work the paper its written on? Is there a more organised way to help reduce risks surround home ownership and on-going tenancies? I’ll be explaining in this article…

So, what Types Of Covers Are Available, And Things Can I Do To Reduce The Risk Instead?

Landlord Building Insurance

This insurance typically covers for building structural issues again things like fire, lightning, explosion, storm, earthquake, flood, subsidence, property owners liability, riot, escape of water, falling trees, theft, malicious damage, ground heave and land slip. The average cover will start from around £75,000 up to a maximum of £2,000,000.

Many of the causes of damage given as an example above are mostly beyond control, however making sure overgrown trees are trimmed and tidy, drainage and guttering are clear and free-flowing for example are traits of good homeownership to ensure to do the obvious to limit the risk. 

Landlord Contents Insurance

This cover will depend on whether you plan to rent your property furnished or unfurnished. Contents insurance will also cover fixtures and fittings, as well as curtains and carpets – anything that can be damaged by fire, flood, or theft – usually up to a maximum of £50,000. Dependant on the policy, you’ll want to check that the contents are replaced old for new rather than an estimated reimbursement.

Again, good homeownership traits apply, ensure the property is safe and have valid in-date safety certificates, advise tenants on good practice for fire safety, and that any and all entry points in and out the property are in good condition and secure. 

Liability Insurance

As a landlord, you are responsible for the health and safety of your tenants. Liability cover will protect against lawsuits for injuries, accidents or fatalities that should happen at your property. Typically, the maximum for standard liability is £2-million.

Ensure you are on top of all health and safety regulations in relation to the property and its tenancy, this will massively reduce the chances of there being backlash brought onto you if something unfortunately were to happen.

Loss Of Rent Insurance

A cover in the event that the property becomes inhabitable, and in turn you’re unable to rent it out. Typically, you’d get 20% of the building’s sum insured. Usually for 12 months, however this can vary depending on the policy.

The obvious factor behind this would be to ensure you maintain the upkeep of the property, especially as soon as an issue arises. If left to dwell, small issues can escalate relatively quickly. 

Emergency Assistance Cover

This cover is in the circumstance an emergency call-out needs to happen, for example, a boiler breakdown. The cover brings convenience as most providers will offer 24-hour services, 365 days a year to be called out. It could work out well if you live far from the property and don’t have a managing agent overseeing the property and it’s tenancy.

To help negate the risk of having frequent breakdowns, take precautions such as doing a boiler service yearly alongside the Gas Certificate checks. Don’t rely on a yearly Gas Safety check alone and expect to have no issues, as these checks are for safety rather than longevity.

Rent Guarantee Cover

Rent Guarantee insurance is something I’ve discussed in length on another article, check it out here!

But in a nut-shell, this is covered to fall into place in the circumstance that your tenant falls into rent arrears. There are certain factors to consider, such as most insurers expect the tenant to be referencing to a particular standard.

Ensuring your tenant has been thoroughly referenced, including previous landlord references is key to helping negate this factor. Also, we at Abbey Property have a minimum standard that the housing income should be as a minimum 2.5x the rental amount to feasibly be able to afford to live in that property.

Legal Cover

To cover legal costs that arise from tenant disputes, such as rent arrears, refusal to leave the property, overcrowding, or unauthorised occupants.

Have a good and clear line of communication, as well as frequent property inspections from the start can help reduce the risk of needing this cover in place.

Tips On Picking The Right Cover?

Searching for covers for your property is just like searching for any other cover, such as home, car, or pet insurance.

Shop around!

There’ll likely be different types of covers amongst different insurers, so be cautious. If a cover is significantly cheaper than another, it may be because it doesn’t cover as much as you’re expecting it to.

Some insurers may offer a discount for multiple properties, or multiple covers taken out simultaneously. This could save you a little on the overall cost.

And finally, paying for your insurance in one go, as opposed to monthly will definitely save you some money. Most insurance products that offer monthly payments will be subject to interest charges accrued for the period of time you pay it off.

Landlord Advice