How much does landlord insurance cost?

If you’re dipping your toe in the rental market, you’re probably pondering the same question we regularly get from prospective property owners: do I need landlord insurance?

The short answer is yes. But to what extent will depend on several factors we’ve outlined below. Your second question might then be: how much does landlord insurance cost? In this guide, we’ll also talk about who needs landlord insurance, what it typically covers, the average costs, and how to save money on your insurance premiums.

Landlord insurance for buy-to-let properties starts at £132+IPT* (insurance premium tax) per year, but the cost depends on a variety of factors, which we’ll cover in this guide. (*amount charged in March 2021)

If you’re still unsure whether you need landlord insurance after reading this post, give us a call. We’re happy to talk through the details.

In the guide, we cover:

What is landlord insurance
What landlord insurance covers
If landlord insurance is compulsory
How much landlord insurance costs
How to get cheaper landlord insurance

What is landlord insurance?

If you’re familiar with domestic buildings and contents cover, you will already have a good idea of what landlord insurance entails. It’s a policy that acts as a security net against any risks associated with theft, fire, escape of water, or other losses connected to renting a property. But there are some distinctions.

The main difference between landlord insurance and standard home insurance is that you can extend it to cover things like malicious damage caused by tenants. It also might give you financial protection in the event of a legal dispute with your tenants or any loss of earnings.

Standard home insurance generally isn’t suitable for rental purposes as it leaves several gaps that could turn out to be very costly. In contrast, landlord insurance covers the added liabilities and losses associated with renting a property to tenants.

What does landlord insurance cover?

As with any form of insurance, the cover and cost will vary depending on your chosen insurer and set of circumstances. Landlord insurance typically covers as standard:

Buildings insurance

Landlord buildings insurance offers financial protection against natural disasters such as lightning, earthquakes, and fire. It can also cover risks like burst pipes, water leaks, theft, malicious damage, subsidence, landslips, and more.

Contents insurance

While your tenants should have contents cover for their possessions, landlords should seek protection against damage caused to any fixtures or fittings in your rental property. Landlords contents insurance does just that, covering materials such as curtains, flooring, fitted kitchen appliances, and light fixtures. Even if your rental property is unfurnished, you should still protect the contents that come as standard.

Property owners’ liability

One of the biggest financial and reputational threats to landlords is any legal claim made by a third party concerning personal injury or property damage. As a landlord, you have a legal responsibility to ensure your property is safe and doesn’t present an unnecessary risk. Typically, property owners’ liability insurance provides a limit of indemnity for legal costs associated with a claim.

Loss of rent

If your property becomes unhabitable due to damage, you could lose a significant amount of rental income. Whether it’s a flood following a storm, or a fire caused by a neighbouring property, loss of rent insurance allows you to claim back any income usually paid by your tenants while your property is made habitable again.

Optional landlord insurance covers

Accidental damage

Safeguard your contents against accidental damage caused by tenants or third parties by bolting this optional cover onto a landlord insurance policy. It’s useful for covering the cost of replacing damaged carpets, furniture, or flooring, but doesn’t include general wear and wear.

Legal expenses

While property owners’ liability insurance typically pays for legal costs associated with injury, you may want extra protection for other scenarios, such as evicting a tenant. Legal expenses insurance helps to pay for recovering any damage costs and dealing with any breached tenancy agreements.

If you want to find out more about the standard and optional covers offered by our panel of insurers, get in touch today.

Is insurance compulsory for landlords?

Landlord insurance is not a legal requirement. However, that’s not to say it isn’t essential. We’ve highlighted a handful of the risks above, but there are many more which could lead to financial and reputational damage.

It’s worth knowing that if you have a buy-to-let mortgage on your property, the lender may specify that landlord insurance is required. Likewise, your tenancy agreement may require you to take on specific responsibilities best served by a policy. It’s therefore sensible to err on the side of caution and mitigate any risks before accepting tenants.

Whether you rent one house or flat to paying tenants, or you’ve got multiple properties, landlord insurance offers peace of mind for a relatively small outlay. Not doing so could be far more costly.

The average cost of landlord insurance for a buy-to-let single property policy is £150 a year (plus insurance premium tax), but there are multiple factors that influence the cost of insurance, and some properties will cost more.

Contributing factors include the cover chosen, your insurance history, any excesses, and the number of properties insured.

Here’s a rundown of what else insurers will take into consideration when calculating your landlord insurance cost:

The type of property.
The age of the property – older properties are usually more expensive to insure.
The condition of the property – e.g. if it is a listed building, it can be more complex to insure.
The property location and whether it’s prone to flooding.
If the property is occupied currently.
The construction material used.
Whether there are any renovation works.
How many tenants you plan to house.
Whether your tenants are students, employed, HMO, or house share. Bear in mind tenants with low level income mean a higher risk to insurers and potentially higher costs for landlords.

At Bollington, we appreciate that not every landlord is working to the same budget and, as such, different levels of cover are needed. Therefore, if you contact our team today, we can find a competitive policy that minimises your risks and saves money in the process.

How to save money on landlord insurance

Security – fit your property with alarms and strong locks on windows and external doors. Heightened security also reduces the likelihood of your property being burgled and the loss of your no claims discount.
Reduce vacant periods – empty properties are a bigger target for thieves, and insurers will reflect this is their premiums.
Maintenance and repairs – as a landlord you have a duty to ensure your properties are kept in a good state. Regular maintenance checks can help to reduce the likelihood of you having to claim on your insurance – e.g., for a burst water pipe.

One of the best ways to get better value for money on landlord insurance is to package up all your covers into one policy. That’s precisely what we do at Bollington. We’ll speak to our panel of insurers and find a policy that protects against all your risks, whether for buildings, contents, property liability, or loss of rent. Grouping all the cover together means you needn’t seek additional insurance elsewhere — it’s all nicely wrapped up into one easy-to-manage policy.

Head over to our starter checklist for landlords for tips surrounding making your property more desirable to insurers. We’ve also got a guide for running tenant reference checks.