The Complete Guide to Landlord Insurance
Landlord insurance is a must-have for all homeowners. However, there is often some confusion about what exactly landlord insurance is and what it does.
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Given the great variety and abundance of insurance packages available, inexperienced landlords may often waste money on unnecessary coverage that isn’t tailored to their needs or circumstances. This guide will help clarify what landlord insurances are available and discuss the various policies that are covered.
What is landlord insurance?
In short, landlord insurance is — an insurance policy that covers property owners from financial losses concerning their rental properties.
There are a number of different covers and policies within the landlord insurance category, including building and content insurance. Building and content insurance often cover hazards such as fire, lightning explosion, storms, theft, and negligent or malicious damage. It is important to note that landlord insurance rarely covers any tenants’ personal belongings.
Do I need landlord insurance?
Landlord insurance is not a legal requirement. However, if you are a landlord and own one or more rental properties, it can be beneficial and almost necessary to have landlord insurance cover. Furthermore, landlord insurance is often a requirement for mortgage borrowers.
Ultimately, it is a balanced assessment of risk and reward that a landlord needs to weigh up and see the extent to which this insurance will benefit them and their property. It is rarely the case that landlord insurance is not worth it, as being a landlord carries many risks.
How much is landlord insurance?
The cost of landlord insurance varies depending on what level of coverage you purchase. The more extensive the cover and the bigger or more expensive the property, the higher the cost. As with any insurance, the quote you get for your cover will be issued based on the calculations of your premium, which aims to make the most accurate prediction of the likelihood of you making a claim.
What types of landlord insurances are there?
There is a wide range and variety of landlord insurance types covering different risks associated with property rental. Some of the most common are:
- Landlord building insurance
- Landlord contents insurance
- Rent Guarantee Insurance
Landlord building insurance covers the cost of repairing a property if its structure is damaged or destroyed.
Landlord contents insurance covers the furniture and items in the property if they are stolen or damaged.
Rent guarantee insurance covers your property rent for up to £4,000 per month or £50,000 per year
*Additional covers are also available for rent guarantee insurance.
What is contents insurance?
Contents insurance will cover you if, for example, an item in your home is stolen, damaged or lost. Thanks to contents insurance, you can recover the cost of the item.
The insurance provider will ask you questions surrounding the incident, and once they are satisfied with your claim, they will either replace the item or pay out the value of its worth. It may be that you will be asked to provide extensive proof for specific reimbursements, especially if the stolen or damaged object was costly.
What does contents insurance cover?
As mentioned above, contents insurance covers your property’s belongings against loss, theft or damage. These include
- Kitchen items
- And bicycles – as long as they’re kept in the home.
Contents insurance can further extend to cover your possessions against fire, arson and accidental damage. However, in most cases, this type of insurance will not cover the possessions of those who reside in a property temporarily.
How much is contents insurance?
The cost of contents insurance varies depending on the value of the items you want to cover. According to The Money Advice Service, the average cost of contents insurance is £59.22 annually, equating to £4.93 per month. However, keep in mind that the cost of contents insurance will be affected by the value of the items that the insurance covers.
Do landlords need contents insurance?
Getting contents insurance as a landlord isn’t legally required or necessary. That being said, if your rental property is furnished without any kind of cover, you will be liable to pay for all associated maintenance, repair, or replacement cost if your furnishings are damaged, lost or stolen. Eligibility for contents insurance extends to anyone with a roof over their head, including landlords and tenants.
If a property is furnished, we recommend that landlords buy contents insurance. At the same time, tenants should consider getting cover if they have any personal belongings in the property itself.
What is rent guarantee insurance?
Rent guarantee insurance, also known as tenant default insurance, is one of the most common covers for landlord insurance. It protects them if tenants choose not to pay their rent.
If you need to make a claim, the rent guarantee insurance will kick in and cover you against unpaid rent for up to 12 months.
What does rent guarantee insurance cover?
Rent guarantee insurance covers you for up to £4,000 per month or £50,000 per year of expected rental income. It also includes the cost of repossessing your property and legal proceedings if you need to evict the tenants. Some additional benefits of purchasing rent guarantee insurance include pursuing the rent owed by tenants and the cost of any alternative accommodation you have had to pay for.
Rent guarantee insurance does not cover deferral periods if tenants leave or if you sell the property.
How much is rent guarantee insurance?
The cost of rent guarantee insurance depends on several factors such as :
- the type of property
- your level of rental income
- how comprehensive the cover is
- and whether or not legal cover is included in the policy
Furthermore, the insurance cost will also depend on the property’s size, location, number of tenants and what kind of tenants occupy the property. Therefore, the rent guarantee insurance will depend on the extent of risk that your rent brings with it, as well as all of the above factors.
Do landlords need rent guarantee insurance?
Landlords who have referenced their tenants and have an assured short-hold tenancy in place will be eligible for rent guarantee insurance. Furthermore, the landlord will need to have the tenant’s security deposit stored in an official tenancy deposit scheme. While it — is not a legal requirement — to have rent guarantee insurance, it can offer added peace of mind to landlords. Even the best and most reliable tenants can find themselves in difficult or unpredictable circumstances, which could render them unable to cover the cost of the rent.
Having rent guarantee insurance protects you against any potential issues that may arise where the tenant can no longer pay the rent.
What is home emergency insurance?
Home emergency cover insures a landlord’s property against sudden or unforeseen circumstances that may make the home uninhabitable. Most importantly, you must note that home emergency insurance specifically covers — emergencies — not preventable issues or those where replacements of appliances and furniture are required. Anything that does not have to be dealt with immediately will not be covered by home emergency insurance but simply by a home insurance cover.
What does home emergency insurance cover?
A home emergency insurance cover will insure landlords against several unique yet commonly occurring problems around properties. As a landlord, you’ll be covered against unforeseen circumstances in the property, including lost keys, a boiler breakdown, loss of water and electrical faults.
How much is home emergency insurance?
Home emergency insurance will vary in price depending on a number of factors that insurance providers consider when preparing your quote. To provide you with an example, Mashroom can offer home emergency insurance starting at £130 per annum.
Do landlords need home emergency insurance?
Accidents happen, and when things go wrong, it can prove challenging and problematic for landlords to resolve such occurrences or emergencies if they don’t have adequate coverage. This is especially true if the landlord is further afield and does not have rapid and easy access to the property. Under such circumstances having a home emergency insurance cover may be helpful as it offers added security in unexpected situations.
As with most insurance covers, you will most often have to get in touch with a broker who will look to choose the right landlord insurance suited to your property. You may find that some brokers overcharge, whether that be through selling you unnecessary packages or because they earn a commission. This is where Mashroom can offer you a practical solution.
With Mashroom, you can add and purchase either contents insurance, home emergency insurance or rent guarantee insurance together or as standalone products.
To receive a quote for contents insurance, you will be asked to enter a few details about your home and belongings. This will help us calculate the quote based on the information you provide us with. You can choose a contents insurance cover option that suits you best and even chose the most suitable start date. We will then send all the relevant documents to your Mashroom account so that you can access them with ease. Once done, you will be covered against theft and accidental damage.
If you choose the home emergency options cover, you will be asked to enter a few basic details to receive a quote Mashroom. We will then provide you with documents that offer cover for your property against emergencies and unexpected incidents.
Rent guarantee insurance is also available via the Mashroom platform and insures landlords insure against tenants defaulting on their payments. Even the best tenants can run into problems that make it hard to pay rent, and by choosing to cover yourself with rent guarantee insurance, you will not be at risk of being left out of pocket. After receiving your quote and selecting the kind of cover you want and the date you want the cover to start, you will have peace of mind knowing that you are covered if the tenant doesn’t pay their rent.
There are various types of Landlord insurance. Choosing and selecting the right kind of cover is crucial for landlords to safeguard their property effectively. It is also important to not make excessive use of the covers or cover yourself for extremely unlikely or inappropriate claims. Instead, pick ones that will prove truly valuable to cover your needs.
If you need any help selecting what product is right for you, drop us a message, and our Mashroom team will be happy to help.