First of all make sure you know the rebuild value of the property you want to insure. If it is £100,000 then stick to that value. Don’t think if someone offers you £1million insurance it is better, the fact is it is not. It will only ever pay out the amount needed – in this case £100,000. And you will be either duped by it or paying more for the additional coverage.
Do you have contents in the property that need insurance? If you do then add them up and note any items that need to be specified because of high value – anything over £1000 is a good rule of thumb.
Once you are armed with these values it is time to get busy on the Internet. First step is to go to Google and search for landlord insurance or let property insurance and then simply pick anyone you like from the first couple of pages. They will give you a benchmark quote and that is what you want. Do not buy at this stage.
The next bit is you doing the price comparison for yourself. You have the starter quote but you don’t know how competitive it is, so now you need to find out. It is time to go to The Property Insurer and click on the landlords insurance tab, then Get a Quote.
It will take around two-minutes and you will receive up to three quotes in one go so you can compare prices yourself. That will give you four quotes in total to choose from and the decision then is pretty simple; make sure that the policy delivers the right values and at the right excess you want and then buy the cheapest one you can.
I own a couple of rental properties, more because when I needed to move home for new employment it was easier to rent them than to sell. And I never can forget the November day when riding my motorcycle to work that I had a sudden epiphany that I was a landlord but didn’t have Landlord Insurance for the terrace house I had just left. It was very cold but I was sweating all the way to work and when I got there I would have paid any sum for Landlord Insurance because to be without it is to face financial ruin, it’s that simple. It was not a pleasant morning but I got it sorted tout sweet and got some cheap landlord insurance.
I cannot imagine not having landlord insurance now on my properties. It averages around £150 per property for landlords buildings insurance and while that takes a month’s profit out of the year it also gives incredible peace of mind and I have slept better ever since.
Don’t go through the experience I had – or worse, don’t think you are being smart saving a few pounds by not insuring your rental property – get yourself cheap landlord insurance now.
There are around 2 million private landlords in the UK and 4.2 million privately let properties (please see ONS for details). If you include social housing, then there are 8.3million rented properties, or 36% of all housing stock in the UK rented out in one shape or form. The good news is because the market is so big, prices for landlord insurance is competitively priced.
Landlord insurance is very similar to standard buildings and contents home insurance but it is specifically designed for let property only. Wiki gives an excellent definition of landlord insurance HERE. It basically says that landlord insurance protects the property owner from financial loss associated with the building and/or contents of the let property.
A let property is much like your own home and needs similar insurance. Let property buildings insurance protects the building itself from perils such as subsidence, theft/break in, flooding, accident damage and just about anything else that may cause damage.
Imagine if a fire razed the property to the ground, utterly destroying it; then let property buildings insurance will pay to have it completely rebuilt to all appropriate standards. In effect, the buildings insurance policy will result in you getting a brand new house built for you.
To understand buildings insurance, read this definition from the Citizens Advice Bureau.
The easy way to understand landlord buildings insurance is to imagine picking the property up and shaking it. Anything that is fixed into the building and doesn’t rattle around is covered by buildings insurance. Everything that rattles around is what you need contents insurance for.
Landlord contents insurance is also very similar to what you might have at your residential home. It protects all those items that rattle around in the imagined property. Televisions, sofas, microwaves, computers, clothes, mobile phones, jewellery, fridge contents and any spare cash. But because you are a landlord, you are unlikely to have as much landlord contents in the property as your normal residential home – after all, your tenants will bring their own clothes, food, computers and other items. For a good definition of Contents Insurance, see WIKI.
If you let a property unfurnished, then you will have minimal landlord contents requirement. Many landlords will choose not to pay for landlord contents insurance if they only supply carpets and a cooker. They self insure because the benefit of insurance is not enough when claims will be so infrequent and replacements are cheap to source.
One important consideration is tenant malicious damage cover. You normally get this with buildings insurance policies, but you need to check it is included as some low price providers will omit it to keep costs down. If you are a leaseholder, then you may not have malicious damage cover under the freeholder’s block policy. If you want it, then you are best advised to buy landlord contents insurance with malicious damage cover included – it is usually the only way you can access this cover as it is not offered separately. But not all landlords want or need tenant malicious damage cover as it will add cost and they might not anticipate any issues.
But if you let a property fully furnished, then landlord contents insurance is a must. It will protect everything you own against loss and malicious damage. It’s worth noting that the insurance will not pay out against normal wear and tear and there’s no point trying to make a claim, you will be found out if you try to claim for a 20-year-old sofa being stolen. Insurers have big fraud detection departments for that sort of thing.
There are other types of Landlord Insurance that you may want to consider as well. These are add on purchases to the basic building and if needed content insurance and are normally purchased at the same time via your insurance broker. To understand what an insurance broker does, see this article on the British Insurance Brokers’ Association website.
The first and perhaps most popular landlord add on sale product is Rent Guarantee Insurance. ‘This Is Money’ sums it up well in this article. Basically this add on will
cost around £100-£120 per year in addition to your building and contents landlord insurance but promises to pay out if the tenant fails to pay their rent, up to a certain value.
Normally a rent guarantee policy will pay for up to six months loss of rent out of every 12 months. It stops then as the insurer would expect you to have evicted the tenant and got paying tenants in within that time period. The value of the monthly payment is also fixed, with £2500 being a typical maximum. You can get increased rent cover if you need it but expect to pay a little more on the policy.
Rent Guarantee Insurance is great if you are very cautious and want to cover against loss of rent. But it does come with some caveats. In almost all cases, the tenants must be credit referenced and checked, along with references, before the cover is allowed. This can add cost at the start of the tenancy. The National Landlords Association explains what this is and offers it at low cost if you visit their website.
The other consideration is that the rent guarantee policy will normally not pay out in the first month of loss. It will be the second month before you start receiving the failed payments from the insurer. Check all policy
wordings before or just after you buy these policies to make sure you understand what you are buying. Don’t forget you have 14-days cooling off and can cancel any purchase if you are not happy with it under the Financial Conduct Authority rules. Moneywise gives a good explanation of how the cooling off period works.
If you pick your letting agent carefully, many of them offer rent guarantee as part of the standard lettings service and cost. It’s worth around £10 per month if you were to buy separately, so maybe a way of saving on this cost. The benefits are largely the same, but ask the agent just to be sure before committing.
Landlord Legal Expenses Insurance is sometimes bundled into a rent guarantee insurance package. The two work hand in hand and the legal expenses policy gives you an amount of legal cover so you can pursue the tenant for loss of rent. In most cases you will have to use the provider’s chosen legal company.
But you can buy landlord legal expenses insurance separately because it can cover more than simple rent arrears and chasing for payment. If there is a property dispute with a neighbour, then legal expenses cover could be very effective in getting the right legal representation in place. It can also be used to assist with evictions and recovering money for malicious damage. Most Landlord Legal Expense Insurance will offer between £25,000 and £50,000 of contribution towards legal costs. We would suggest the £50,000 option is most useful as costs can escalate quickly in any legal dispute.
Your approach to risk will decide whether you wish to purchase rent guarantee insurance and/or legal expenses cover. The sure fact is if you ever call on them, the small initial cost will be well worth it as the benefits can save you a lot of money.
Landlord Emergency Cover is another popular insurance. This is normally retailed for between £50 – £100 and offers an unlimited number of claims per year for emergency situations. These are the sort of events that really cause stress for tenants and landlords. You can read more about landlord emergency cover on Property 118.
Landlord Emergency Insurance is an annual policy with an unlimited number of claims and normally zero excess. It is worth noting it can only be used in emergencies though. So if the boiler breaks down and won’t start, then the tenant or you can call the supplied number and get an engineer out on an emergency call. We would suggest you give the emergency contact details to the tenant who can then arrange the engineer as early as possible and for a convenient time.
The same happens if the electrics fail. Or if the tenant loses their keys and there is no way into the property. If the toilet blocks and there is no other toilet within the property, then that is an emergency as well. In all these cases the tenant can liaise with the Landlord Emergency Insurance contact centre and get tradesmen out to help quickly.
There are some restrictions though. The policy you buy will have a limit per claim, normally between £500 – £1000. That means the fix has to cost less than this amount or else you could be asked to pay additionally. This is relatively rare however, as most fixes will cost less than £1000.
In the case of boiler cover, it will normally be part of the insurance offer that the boiler is serviced annually. If it isn’t serviced, then it will not come under the cover – this is common sense.
And in the eventuality that the tradesman says the problem cannot be fixed, then the insurance will normally cover the cost of moving the tenants to a hotel for the night until a new unit or permanent fix is put in place.
Overall, Landlord Emergency Cover gives a valuable service to tenants and landlords and removes the problems of getting skilled engineers at any time of the day or night. But like any insurance product, you need to read the documents and understand what you need to do and how the cover works.
Good landlord insurance will also allow for periods of void or vacancy. You could buy Unoccupied Insurance for this but good Landlord Insurance will take care of this for you. Normal residential home insurance policies will allow up to 30-days empty property, but some landlord insurance policies can allow up to 60-days because they understand that getting tenants can take time and effort. Normally this is no additional cost to the policy holder.
The one exception here will be when you first buy and insure the property. If it is empty at the start, then you will probably need to buy unoccupied insurance separately and then transfer it across into a landlord insurance policy once you find tenants. The periods of vacancy allowed by the landlord policy will then apply when you need new tenants.
Landlord Insurance is a commercial insurance product and in that way it is different to residential home insurance. In all other ways it will offer similar cover and protection and should not be a concern to the landlord. For more information, visit Which.
It is important to know that normal home insurance will not work for a let property. You will need landlords insurance. Don’t think you can get away with it either, as this article in the Telegraph illustrates. The good news is that landlord insurance costs around the same as home insurance for the
same property, so there is no advantage or reason to avoid it. Indeed, if you have a buy to let mortgage, it will be compulsory to have specialist Landlord Insurance in place at all times.
To get the very best Landlord Insurance in the UK and compare prices of UK specialist providers, use The Property Insurer. There is at least one of the panel offering a price guarantee to be the lowest price in the UK, so why not click and get your quotes today and see how much money you could save.