Insurance is to a landlord is what cookies are to cream – one is just not the same without the other.
And when it comes to insurance, there’s a whole lot more at risk than simply your taste buds.
Of course, insurance is not a legal requirement for landlords – but if your buy-to-let property is mortgaged, you can be sure that your lender will insist on a buildings insurance policy.
But buildings insurance is simply that – in place to protect your property.
When it comes to your tenants and your finances, landlord insurance covers a whole lot more, including:
- Landlord’s contents
- Owner’s liability
- Accidental damage
- Legal expenses
- Tenant rent default
Landlord public liability insurance: What is it?
Landlord liability insurance protects you against injury and damage claims that might be brought by your tenant.
But, not only that, it also guards against claims by third parties who may have been invited into the property by your tenant.
We should be clear on one thing: You have a responsibility to your tenants and their visitors and they should be safe living in your rental property.
So, landlord liability insurance is in no way an excuse to let things slip when it comes to maintenance and health and safety.
But, should your tenant or a visitor to your property be unfortunate enough to injure themselves, public liability insurance will cover any compensation or legal fees.
Let’s consider an example.
If your tenant’s partner were to trip on a loose floorboard or a piece of carpet sticking up and they injured themselves badly enough to need time off work, you could be looking at a hefty compensation bill, not to mention legal fees.
Public liability insurance, in that sense, offers complete peace of mind.
Do I need public liability insurance?
While it’s not a legal requirement, accidents do happen and it’s only when such an event occurs you realise you should have taken out a policy.
By then, of course, it’s too late – for both the injured party and yourself.
And no matter how well on top of your property’s maintenance you think you are, it only takes a minor defect to cause an injury
How much cover should I take out?
The numbers get a bit scary here.
But the fact is compensation claims can be high – and the legal fees high, too.
Most insurance providers will offer public liability insurance of between £2million and £5million for private residential landlords, but the amount of cover required will depend on your needs and circumstances.
Why so much cover?
Think about it this way.
If a tenant trips on a loose tile or piece of flooring, falls down the stairs and ends up paralysed, you could be liable for medical bills and loss of income for the rest of their life.
That could easily run into millions of pounds and while it’s a pretty morbid way of looking at it, it’s also a fact and emphasises the importance of a good landlord public liability insurance policy.
Tenants liability insurance
It’s not just landlords who can take steps to protect themselves – tenants, too, can take out their own liability insurance should they wish.
And as a landlord, you might want to insist they do – particularly if you are renting out your property furnished.
Tenants liability insurance essentially protects a tenant’s deposit should they accidentally damage fixtures or fittings in your property.
So, rather than deduct from their deposit to replace a carpet stained with red wine, the tenant’s insurance provider pays out and their deposit is returned in full.
Most policies range in cost between £5 and £10 per month, so it would be down to the tenant to consider whether this offers value or if they should rely on their deposit to cover any damage.
And landlords should be aware that insisting on tenants liability insurance on top of taking a standard deposit could put off many renters and reduce interest in your property