Landlord insurance, what is covered and what is not

If you let a property on a policy written for owner-occupiers, you may find at the worst moment that you are not insured at all. Landlord insurance exists because a tenanted home carries different risks, and because your buy-to-let lender will insist on it. This guide explains what a typical policy covers, what the optional extras add, and where the exclusions bite.

Why a standard home policy falls short

Ordinary home insurance assumes the policyholder lives in the property. Let it to tenants without telling the insurer and most policies become void, so a burst pipe or a fire could leave you with the full bill. Even where an insurer agrees to note a tenancy, the policy will not include the elements that matter to a landlord, such as cover for lost rent or liability to tenants. If you already own a home and are buying a second one to let, you need two different kinds of policy.

What comes as standard

Buildings insurance covers the structure and permanent fixtures against fire, flood, storm, subsidence, escape of water and similar events. The sum insured should be the rebuild cost, not the market value, and your mortgage lender will require this cover as a condition of the loan. If you own a leasehold flat, the freeholder often insures the building and recharges you, so check before buying a second policy.

Landlord’s contents covers the items you provide, such as carpets, curtains, white goods and furniture in a furnished let. It does not cover anything belonging to the tenant.

Property owners’ liability protects you if a tenant, a visitor or a tradesperson is injured or has property damaged because of something to do with the building. Cover of £2 million or more is normal, and it is the part of the policy that can save you from a life-changing claim.

Loss of rent pays the rent you would have received if an insured event, such as a fire, makes the property uninhabitable while it is repaired. It is usually limited to a set number of months and a set percentage of the sum insured.

The optional extras

Rent guarantee and legal expenses cover is different from loss of rent. It pays out when a tenant simply stops paying, and it funds the legal process of recovering the property. It normally requires the tenant to have passed referencing and the tenancy to be properly documented. Cover, limits and waiting periods vary widely between insurers, so this is one to read closely.

Home emergency cover provides a tradesperson for a boiler breakdown, a blocked drain or a lost key, which spares you the midnight phone call. Our home cover products can be arranged alongside a landlord policy.

Malicious damage by tenants is excluded by many standard policies and available as an add-on. Accidental damage covers the spilt paint and the dropped television rather than the events on the standard list.

What is usually excluded

Read the exclusions before the benefits. Common ones include:

• Wear and tear, and gradual deterioration such as damp that builds up over years.
• The tenant’s own belongings, which they should insure themselves.
• Periods when the property is unoccupied beyond a limit, often 30 to 60 days, unless you have told the insurer and met their conditions.
• Damage where the tenancy was not documented, referenced or inspected as the policy requires.
• Certain tenant types, such as students or people receiving housing benefit, on policies that were not written to include them.
• Any claim where the sum insured was too low, which can reduce the payout on every claim, not just the big one.

Portfolios, HMOs and flats above shops

If you own several properties, a portfolio policy puts them on one schedule with one renewal date and usually a better rate than insuring each separately. Houses in multiple occupation, holiday lets and flats above commercial premises are all insurable but need a policy written for them, and getting that wrong is another way to find yourself uninsured. Tell us what the property is and how it is let, and we will match the policy to it.

Keeping the policy valid

An insurer can only price what it knows. Tell them about changes of use, building work, long void periods and new tenant types. Keep an inventory and check-in report, carry out and record inspections, and keep the referencing paperwork. None of it takes long, and all of it is what an insurer asks for when a claim is made.

Next steps

Whether you are buying your first let property or reviewing an existing policy at renewal, ask us for a landlord insurance quote. We compare insurers on cover as well as premium, and we will tell you which add-ons are worth having for your property.

This guide is general information, not advice. It describes how things usually work and cannot take your circumstances into account. For a recommendation, speak to an adviser.

Cover is subject to underwriting and to the terms and conditions of the policy. Conditions and exclusions apply. Please refer to the policy documents for full details.