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Landlord insurance and home insurance - what are the key differences?

Tue 21 May 2019

As a landlord, it’s vital that you have insurance in place to make sure your investment is covered if anything goes wrong.

But what type of cover should you be getting? And what are the main differences between landlord insurance and plain old home insurance?

Below, using our experience as West Lothian's first dedicated lettings agency, we take a closer look.

Not mandatory, but highly recommended

Although it’s not compulsory, getting yourself landlord insurance is a wise move if you’re renting out property. And, luckily, it won’t break the bank to do so.

Having standard home buildings and contents cover is unlikely to protect you if anything goes wrong with your rental homes, which is why it pays to have a landlord policy in place.

While home insurance – which can either be buildings insurance, contents insurance, or a combined building and contents cover – protects the structure, fixtures and fittings and belongings in a home, it can prove of less use when you're renting out a property as insurers assess the risk of tenants as very different to a situation where you, as the owner of home, is living there.

Which is why landlord insurance should be viewed as home insurance-plus, or a supercharged version of home insurance – there to cover the extra risks associated with renting out a property.  

As you’d expect, a group of students or housesharers who like throwing parties, a young professional couple who enjoy socialising lots, or even a family with young children, are likely to be higher risk than a middle-aged professional couple who are owner occupiers and now enjoy the quiet life. By letting a home rather than living it, the risks involved – and the chances of insurance claims being made – naturally go up.

What does landlord insurance include?

Landlord insurance typically involves a number of possible means of cover. You can tailor your level of cover to your individual needs, and can decide what you need and what you don’t. Naturally, the more elements of cover you add, the more the price will go up.

Effectively, landlord insurance covers everything you’d expect in any decent home insurance package, but also focuses on a number of specific tenant issues.

You can choose to cover yourself for a range of possible scenarios, including eviction of squatters (for situations where tenants simply won’t leave the premises), loss of rent (for when tenants don’t pay what they owe or are rehoused because of damage to your home) and accidental/malicious damage or theft by your tenants (for those times when goods or furnishings are damaged, either accidentally or deliberately, by your tenants, or when your possessions are stolen).

Additionally, you can cover yourself against damage caused by the illegal growing of drugs in your rental homes, for expenses in situations where you need to take legal action in tenant disputes, and for public liability, protecting yourself if a tenant or visitor sustains an injury on your property and then makes a claim against you.

Lastly, you can opt for buildings cover – effectively a form of buildings insurance which allows you to repair or rebuild your home if its structure is damaged, most likely via storms, flooding or excessive rain – and contents cover for your own possessions. If something in your home is damaged by fire or flooding, or stolen by someone who isn't your tenant, you would be protected by this type of cover.

Remember, though, that this cover doesn't pay out for your tenants' contents – they need their own separate cover to ensure they are protected.

This page goes into more detail about what you'll be asked by insurers when you buy landlord insurance, what could invalidate your policy (including not providing smoke and carbon monoxide alarms), and why additional cover will be needed if your home is left empty for more than a month. It also outlines how you can make a claim on your landlord insurance if the need arises.

Who provides landlord insurance and how much does it cost?

Many landlords purchase insurance through brokers such as Alan Boswell Insurance and Adler Insurance Brokers who provide independent advice.

A number of big-name insurers offer landlord insurance – some of the biggest names of which are HomeLet, More Than, Direct Line and AXA.

You can use comparison websites such as CompareTheMarket, Confused.com, GoCompare and MoneySuperMarket to compare the best quotes for landlord insurance on the market.

Always check that the insurance concerned is specifically for the residential rental market, and covers all the vital areas, as all policies will not necessarily provide the right cover for you.

The websites for Scottish Landlord Insurance and Landlord Insurance Scotland are also likely to prove useful.

The cost of landlord insurance varies depending on a number of factors, such as the size of your home and the type of cover you opt for. It’s also important to remember that the cheapest cover may not always offer the best value for money, as you need cover which is right for your own individual needs.

The average cost of landlord insurance is between £120 and £220 per year, but it’s a great way of protecting your investment and giving you peace of mind.

Here at Letting Solutions, although we cannot provide you with advice on how to make sure you have the right insurance in place, we can make you aware of specialist insurers and brokers before you rent out your properties.

As part of the pre-tenancy preparation we offer, we provide our landlord clients with advice on pecialist insurers and brokers  as well as a ready to rent assessment to ensure the home is fit for tenants and free from any safety issues (the sort of thing which could lead to insurance claims or an invalidation your policy).

We strongly recommend speaking to a landlord insurance expert or broker to ensure all your bases are  covered.

To find out more about what we can do for you, please contact us on 01506 496 006.

We also offer free and instant online valuations to give you an idea of how much you could be charging in rent each month.

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