Landlord Insurance Explained — What Cover You Need and What to Avoid

Why Standard Home Insurance Does Not Work

Standard home insurance policies exclude commercial use, which includes letting a property to tenants. If you let a property and only have standard home insurance:

• A claim (fire, flood, escape of water) may be refused
• You will have no liability cover if a tenant or visitor is injured
• Any mortgage terms requiring buildings insurance may be breached

You need a **landlord insurance policy** specifically designed for rented properties.

Buildings Insurance

Buildings cover is the core element of any landlord policy. It covers the cost of repairing or rebuilding the property after damage from:

• Fire, flood, storm
• Escape of water (burst pipes)
• Subsidence
• Accidental damage (optional add-on)
• Malicious damage by tenants (often available as an add-on)

**Sum insured:** The buildings sum insured should reflect the **rebuild cost** of the property, not its market value. The rebuild cost is typically lower than market value for established properties but can be higher for listed buildings, unusual construction, or properties in expensive areas with high labour costs.

Underinsurance (insuring for less than the full rebuild cost) can result in claims being proportionally reduced. Use the Association of British Insurers’ rebuild cost calculator or a surveyor’s rebuild cost assessment to set the correct figure.

Liability Insurance

Landlord liability insurance (sometimes called “property owners’ liability”) covers claims from tenants or third parties injured or whose property is damaged as a result of your negligence as a landlord.

**Example:** A tenant trips on a loose stair carpet you were notified about but failed to repair. They sustain a serious injury and claim £200,000 in damages. Without liability insurance, you pay this personally.

Liability cover is usually included as standard in landlord policies. Typical cover levels are £2 million to £5 million.

Rent Guarantee Insurance

Rent guarantee insurance (also called rent protection insurance) pays the monthly rent if a tenant defaults on payment. It typically:

• Kicks in after 1–2 months of non-payment
• Pays up to 12–24 months of rent while legal action proceeds
• Often includes legal expenses cover for the eviction process

**Requirements:** Most rent guarantee policies require:

• A satisfactory credit reference on the tenant
• A properly drafted and executed AST
• Deposit in a government-approved scheme

Policies with lower premiums often have higher excesses or stricter eligibility criteria.

Legal Expenses Insurance

Covers solicitor fees for eviction proceedings, debt recovery, and property disputes. Given that contested evictions can cost £2,000–£10,000 in legal fees, this cover is worth including.

Contents Insurance

If you provide furniture or appliances, you should consider contents insurance. Unfurnished landlord policies typically cover fixtures and fittings only. Furnished properties need an additional contents element.

Tenants’ own possessions are not covered by the landlord’s policy — tenants should hold their own contents insurance.

Key Points When Comparing Policies

• Check whether “malicious damage by tenants” is included or an add-on
• Check the excess on escape of water claims (can be very high — £1,000+ on some policies)
• Check whether the policy covers periods of void (between tenancies)
• Check whether accidental damage is included or excluded
• Read the claims handling reviews, not just the premium