An estimated 85% of buy-to-let landlords have chosen to equip their houses with landlord insurance as a safety net against damage brought on by renters. Due to this, 15% of landlords are left without a backup plan. While they may be able to save a small amount by forgoing insurance, by doing so, they run the risk of severely damaging financial losses.
The average annual cost of landlord insurance in the UK is an estimated £170. The average rental income for a UK landlord is around £11,228 per property. This means that the cost of insurance would take up only 1.5% of the overall income!
With those figures in mind, it seems like a no-brainer when there’s a potential 45% chunk of annual rental income at stake.
What does landlord insurance cover?
Landlord insurance can cover a few potential instances, depending on the package you choose and the features you deem best suited for your property. These can include:
- Buildings only
- Buildings & contents
- Contents only (not including your tenant's belongings)
- Fixtures and fittings
- Full accidental damage
- Loss of rent
- Alternative accommodation
- Property owner's liability
- Unoccupied property cover
- Legal protection
- Malicious damage caused by tenants up to a maximum of £5,000
- Theft by tenants up to a maximum of £5,000
Is landlord insurance a legal obligation?
There is no legal obligation for a landlord to take out landlord insurance. However, it’s certainly in the landlord’s best interest to do so. A conventional home insurance policy unsurprisingly does not offer appropriate cover for a buy-to-let property as it will not protect against damages caused by tenants. If you have a mortgage, then it’s probable that your lender will require you to take out specialist landlord insurance before you’re able to take on any tenants.
How much will my package cost?
Costs vary from policy to policy, so it’s important to do your research and find the best possible policy for your property’s needs. Comparing landlord insurance quotes can help you find the best coverage for you at the best price. The cost of landlord insurance depends on the following:
- The level of cover you take out for your property – the more you cover, the more expensive your package is likely to be.
- The age and size of your property - these factors will likely have an impact on the cost of any potential repairs.
- The type of tenancy agreement that you have.
- The location of your property - insurers will take factors such as crime rates into consideration.
- How you decide to pay - paying annually works out cheaper in the long run than paying monthly.
- Your claims history - if you have made a previous claim then your premium will raise.
The best method to ensure your return on investment and guarantee the future viability of your rental property is to purchase landlord insurance. Before accepting applications for tenancy, double-check your insurance coverage to avoid having your rental income significantly impacted.
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