Do I need landlord insurance?
With what might seem like an already long list of costs attached to renting out your property, you may find yourself wondering ‘do I need landlord insurance?’. In this guide, we’ve uncovered what landlord insurance is, the benefits of taking out cover, and the average cost of a policy.
What is landlord insurance?
A landlord insurance policy is taken out by an individual to protect their rental property against the risk of damages, whether they be financial, physical, or legal.
What insurance do landlords need?
While there is no legal obligation to take out a landlord insurance policy, if you’re renting out property, it’s in your interests to protect yourself against damages. In addition to this, taking steps to protect a rental property is basic landlord etiquette.
As with all types of insurance, level of cover varies between providers, depending on various factors. However, there are common circumstances you should plan ahead for. With this in mind, what does landlord insurance cover?
- Protection against loss of rent
If a tenant is prone to missing rent payments, or outright refuses to pay, it can place a financial burden on you, as you are still obliged to make mortgage payments on the property. As a landlord, you will need to protect yourself against such instances, so it can be prudent to ensure rent cover is a part of your policy.
- Contents cover
The contents of your property can have great value, so it’s important to ensure you’re covered against theft or damage. A typical landlord insurance policy will cover the cost of repairing or replacing damaged or lost items.
- Interior and exterior damage cover
Structural or superficial damage to your property can be an expensive affair, so you’ll need to take out insurance to cover these costs.
- Cover for personal liability
It’s entirely possible that your house may cause injury to an individual, or damage to somebody else’s home. This can be entirely accidental, and can happen as a result of something as simple as a falling roof tile. However, because it is your property, you are responsible. To cover yourself against personal liability, you’ll need to make sure that your landlord insurance policy protects you.
The benefits of landlord insurance
Landlord insurance is relatively watertight, in terms of cover, and allows you to rent out your property to tenants with the peace of mind that, if anything untoward were to happen, you’d have the appropriate financial and legal cover. This includes:
- Injury to a tenant or innocent third party.
- Protection against the cost of flooding, or other natural disaster.
- Cover for the theft or damage of property.
- Protection against damage caused by damp.
In the vast majority of instances, the benefits of landlord insurance far outweigh the cost. Knowing which is the best landlord insurance depends on the type of cover you require, but, to find the best possible policy, compare quotes from numerous providers.
How much is landlord insurance?
The average cost of landlord insurance is in the region of £220 per year, or 15-20% more than a similar level home insurance policy. However, there are, naturally, various factors that may either increase or decrease the price. For instance, the significance of the cover you take out and the value of optional add-ons. Other contributing factors include:
- Tenant type
The type of tenant you rent to can have a big impact in the cost of your landlord insurance policy, with your provider taking the likelihood of damages into account. For instance, if you rent out to students, you’re likely to pay a premium, compared to if you rent to a family or professional people.
- The geographical location
Where your property is located can impact the cost of your landlord insurance significantly, with particularly expensive rates found across London. Speak to your provider for clarity over regional rates.
- Property rebuild cost
It’s perhaps an unsurprising revelation that the more expensive your property is, the dearer your landlord insurance policy is likely to be.
How to reduce the cost of your landlord insurance policy
If you’ve been quoted a landlord insurance policy beyond your budget, you might want to take steps to reduce the cost. While it’s difficult to lower the price significantly, because a policy is based on the location and value of your property, there are some measures you can take:
- Increase property security
Properly protecting your property against theft or damage can go a long way towards reducing the cost of your landlord insurance policy. However, take into account the disparity between quotes, both with and without alarms, locks, and cameras, and determine whether the saving is worth the additional outlay.
- Pick hassle-free tenants
As previously highlighted, the type of tenant you rent to can impact your landlord insurance policy. To reduce costs, simply implement a policy of only renting to low-risk tenants, such as professional people.
- Consider banning pets
It’s no secret that pets can cause mess and destruction, especially when left alone during the day. This can lead to your insurance provider hiking up the cost of landlord cover. Get around this by either banning pets entirely or implementing a ‘pet deposit’, that can be used to cover animal-related damage.
- Reduce the time your property is vacant
Typically, insurance providers will allow your property to be vacant for up to 30 days at a time. However, if your house is likely to be vacant long-term, you’ll be obliged to pay for separate unoccupied home insurance. An example of rental properties that are likely to see 30+ day vacancies are university houses, with students often returning to their family home over summer.
Renting out your home is a great way to make a little extra money to support your income. However, if you’re in need of an instant cash injection, consider selling your house quickly through a property purchasing company, such as Good Move. Or, for even more advice around buying, selling, and renting property, explore all the latest from us on our blog.