Residential landlord insurance protects a property owner when they let a home out to tenants. Unlike what some may think, home insurance is not appropriate for a let property. While home insurance generally covers the building and contents of a home, landlord insurance safeguards this on top of the business aspects of renting a property.

This includes legal assistance and protection against anything which can stop the property owner from making money.

The most basic part of landlord insurance is building insurance which defends against any issue to do with the structure of the house or items fixed to it.

Public liability is another standard clause in a residential landlord premium – with insurers providing legal advice and financial help if a tenant sued the landlord for an injury they sustained at the property. It is also useful if an incident at the property also damaged a neighbouring home. This is particularly useful if the property is a flat or attached house.

Landlord insurance is not a legal requirement, although some mortgage providers do request insurance on the property as part of the loan terms.

Some letting agents also demand landlord insurance is in place as part of the agreement to take on the property.

Finally, some home insurance providers will not honour a claim if they find it is for a property being let to paying tenants. For this reason, landlord insurance is required.

How much does landlord insurance cost?

The cost of landlord insurance starts at an average of about £170 for a basic package. However, premiums will rise with add-ons such as contents insurance, accidental damage, and rent guarantees.

Larger properties in high-risk areas will be more expensive than a one-bedroom terraced home.

Research on landlord insurance costs by NimbleFins (https://www.nimblefins.co.uk/business-insurance/landlord-insurance-uk) found the smallest homes were not always the cheapest, with the starting rate for a semi-detached house being £150, while a flat in a converted block averaged at £200. Terraces start at about £156, followed by £164 for a flat in a purpose-built block, and £179 for a detached home.

What does landlord insurance cover?

Landlord insurance covers the building, and anything fixed to it permanently as a standard part of the policy. Public liability, contents insurance, accidental damage, rent default, loss of rental income and legal expenses are also aspects of landlord insurance to consider.

Building insurance: Covers damage to the building itself and anything attached to it. As well as bricks and mortar, this includes pipes, guttering, wires, cables, doors, windows, patios, driveways, pavements, fences, fitted furniture such as kitchen units and bathrooms, and wooden flooring and tiles. Some building insurance covers “all risks” apart from those on an exceptions list, while others only safeguard against “certain risks”. These will usually always include fire, theft, flood, storm, lightning, escape of water, explosion, earthquake, riot, malicious damage, civil commotion.

Public liability: If a tenant or other third party sustains an injury because of what they class as negligence on the landlord’s behalf, they can attempt to sue. Public liability pays for the legal costs, compensation, repairs and medical bills. Public liability also covers the cost of repairing damage to a neighbour’s property due to an incident at the policy holder’s building.

Contents insurance: Covering damage or destruction to contents in a home. While the protection is more obvious for those letting a furnished home, even an unfurnished property will usually contain some contents, such as carpets, a freestanding oven or fridge freezer. It is usually an added extra to a policy. Contents insurance kicks in if items are damaged by fire, flood, theft or other perils listed in the building insurance incidents above. However, damage made by the tenants, such as smashed windows or spills, would be an extra under accidental damage.

Accidental damage: An added extra to a policy to cover unexpected incidents by a tenant, visitor or another person at the property. Accidental damage can be added to the building, contents or both. The harm must have been caused accidentally, as insurers won’t pay out if the damage was on purpose. This is a term called malicious damage, which is another extra clause to add to a premium.

Rent default: Also known as tenant default insurance, this meets the lost income if a tenant doesn’t pay their rent. It can also include legal assistance to carry out eviction proceedings, such as legal written warnings and court orders.

Loss of rental income: If a property cannot be rented out due to an incident, loss of rental income will cover the money a landlord would have made had the letting continued. An example may be the house was flooded, and the tenants had to move to alternative accommodation. The landlord would be losing out on rental income, plus having to pay for the other home for them to move into. Or the landlord would have to pay more letting fees to find new tenants after the property became habitable again. Find out about the difference between rent default and loss of rental income here.

Legal expenses: Covering all aspects of legal incidents a landlord could face. They may need help claiming missing rent, carrying out a repossession, or defending against legal proceedings launched by a tenant, official body, or another claimant. Legal expenses cover differs between providers, so a landlord must read what is included and excluded before agreeing on a policy.

Home emergency cover: This add-on provides a 24/7 hotline for a landlord if an emergency occurs. This number can also be used by the tenant or property management company if the landlord wishes. It will connect a caller with assistance and send a contractor out if an incident requires urgent attention, such as a burst pipe in the property. This can provide peace of mind, especially if the landlord lives far away from the property.

Does rental property insurance cover tenant damage?

Rental property insurance can cover tenant damage, but it depends on how comprehensive the policy is.

If an item in a property is damaged by a tenant maliciously – i.e. on purpose – it is unlikely a basic contents insurance aspect of the premium will cover it. This can be purchased as a bolt-on to a policy, and however, in some cases, insurers will refuse to add on malicious damage by a tenant, for example, if the property is rented to students.

When it comes to the building structure itself, malicious damage is usually covered under the building insurance aspect of rental insurance if it was carried out by someone other than the tenant, such as a burglar breaking a door frame to enter the property.

But again, malicious damage by a tenant would need to be added to the premium.

Building insurance covers the structural building such as walls, the roof and floors, plus anything permanently attached to it, such as guttering, pipes, doors, windows, fitted bathrooms and kitchens. It also includes fences, pavements and car parks.

Accidental damage is slightly different from malicious damage and is usually added to a policy rather than being included as standard.

Accidental damage is, as it suggests, unexpected, such as making a hole in the wall while hanging a picture or spilling wine on the sofa.

If a landlord includes an accidental damage premium, insurers will pay out if it was accidental. They wouldn’t meet the cost if the incident was malicious.

If damage has occurred at the hands of a tenant and the landlord insurance will not cover it, the property owner has the option of deducting the cost from the deposit at the end of the tenancy.

Other ways to avoid costly replacement or refurbishment are making the tenant aware of the risks of damaging the property, with a high deposit and thorough inventory before the tenancy begins. Regular inspections also keep tenants respectful.