Landlords: the insurance you need
An alarming number of landlords don't have the right cover in place for their property. Here's how to make sure you're protected.
A quarter of landlords in the UK either have the wrong insurance or no policy at all to protect their property.
Three quarters of these have regular household insurance, rather than a policy suitable for a rented home, which they would not be able to use to make a successful claim.
Many of these are “accidental landlords” who didn’t originally buy a property to rent it out, according to the report from AXA.
No protection
Many people are unaware of the proper type of insurance needed for a rented property. An incredible 43% did not know landlord insurance existed, according to the insurer's research.
Some 28% of those asked by AXA were also unsure of the difference between landlord and standard contents cover. 11% refused to buy a landlord insurance policy because it was too expensive.
But landlords without the correct insurance would have to pay out themselves if anything happened to a property. What's more almost three quarters (73%) have less than £1,000 set aside to cover emergencies, while 18% have nothing saved.
One of the main problems is that many landlords are inexperienced. One in five with the wrong policy previously lived at the address in question and renewed their home insurance policy when they moved out instead of changing it to cover the building when the tenants moved in.
Missing contracts
On top of having the wrong insurance, only 53% have a proper tenancy agreement set up with the people renting out their property and only 27% has a current inventory.
When it comes to security deposits only 54% of landlords has asked for one and less than half of these landlords have put it in a deposit protection scheme.
As AXA points out, while some of these people may have never intended to become a landlord, the consequences of not sorting out such basic admin and putting proper protection in place could make it an even bigger headache.
Separate research from Direct Line has revealed another threat to landlord security. It found that 49% of letting agents found people living unofficially in properties. 79% of these had been living there for more than six months. If these tenants aren’t listed on the tenancy agreement there is a risk the landlord and buildings insurance will be invalidated.
Landlord insurance
Standard home contents insurance won’t protect your house if it’s rented out because it only covers a home which is owner-occupied. As tenants are likely to be less cautious with a house than people who actually own it, the insurance risk and cost will rise so you need to tell your insurer if you start renting out your house.
Most typical landlord insurance policies include both buildings and contents insurance, and liability cover should a tenant be injured in the property you own.
They may also include extras such as paying out to re-home tenants in events such as floods or fires, paying for legal costs if a tenant sues you, free accidental damage, and repairing or replacing items such as a boiler if it breaks down.
The small print
When buying one of these policies the most important thing is to check the small print. Most insurers offer landlord insurance, but the terms and conditions will vary so it’s vital you’ve got the right policy in place.
For example, if you are a leaseholder you will need to check if the freeholder already has insurance set up. In this policy there will be details about exactly what is covered, and any restrictions around renting the property out. If you break these and something happens to a property, you’ll be liable to pay out for any damage as the insurance will be invalid.
You'll also need to weigh up the cost of insurance against your own savings. As with most insurance policies, if you're in the position where you'll be able to cover any emergencies in your property from your own savings, such as replacing a boiler if it breaks down, or legal fees should a tenant sue, then this kind of insurance might not be suitable for you.
You can find out more in our article How to become a buy-to-let landlord
Compare home insurance quotes with lovemoney.com
More on home insurance:
Where to get home insurance for high flood-risk homes
Home insurance: what you can't claim for
Claiming on home insurance costs up to six times the excess
The most common home insurance claims
Why your home insurance claim will be rejected
The true cost of not shopping around for car and home insurance
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