Do You Need it in 2023?
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If you’re a property investor, chances are you’ll need landlord insurance.
A lot can go wrong when buying rental properties, with a tonne of unforeseen issues arising with a pricey bill to go alongside it.
For this reason, you will want to stay protected and cover all your bases to keep your investment as safe as possible.
In this guide, we will take a look at buy to let property insurance, what it covers, the types of insurance available, and the costs involved.
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What Is Buy To Let Property Insurance?
Buy to let insurance, otherwise known as landlord insurance, is a type of home insurance specifically designed for landlords. Your landlord insurance policy can cover a variety of things including legal cover, structural damage to your home, theft, and even loss of rent.
Buildings Insurance for Buy to Let Property
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Contents insurance covers landlords for the cost of repairing or replacing furnishings in a tenanted home. Examples of items protected under contents insurance includes carpets, electrical items, decorative items, and furniture.
You can also add accidental damage cover to landlord insurance, but it should be noted that accidental damage cover only applies to the landlords belongings and not the tenant.
Unlike buildings insurance, mortgage providers may not require landlord insurance, but it’s a good idea to have if you plan to offer your rental property fully or part-furnished.
According to MoneySuperMarket, the average claim for content insurance was £367.81 between June 2019 and May 2020, with the most common claims resulting from water, storm, and accidental damage.
A form of public liability insurance, landlord liability insurance protects landlords from injury claims against your rental property. For instance, if a tenant, guest, or tradesman tripped on loose flooring, liability insurance will cover the compensation and any necessary legal fees.
This is an optional addition, but can often come as a standard on many landlord insurance policies.
Legal cover is an optional addition property investors can add to their landlord buildings and content insurance. This protects landlords in disputes with tenants if tenants stop paying rent and can help in the recovery of rent arrears or cover legal costs if action is taken against the landlord.
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Loss of rent insurance covers the money lost if a property is uninhabited, either due to an insured emergency event like a flood, or if your tenant moves out. In other words, loss of rent insurance protects landlords from void periods.
While optional, most investors would deem this as a necessity if they rely on rental income to cover expenses like mortgage payments.
This is likely the best insurance addition for those looking at buy to let insurance for unoccupied properties.
For landlords who let more than one property, multi-property cover acts as a blanket form of landlord insurance to cover your multiple properties. Some insurers may even offer a discount when insuring multiple residential properties.ed include plumbing issues, leaky roofs, sewage issues, pest infestation, and more. Bear in mind, though, that your landlord insurance provider may limit and exclude certain situations, so be sure to research properly.
If the property is damaged from a flood or fire and can no longer be lived in, alternative accommodation costs insurance is an additional cover that will insure landlords against the costs of housing their tenants in temporary accommodation.
Do I Need Landlord Insurance for My Rental Property?
No, landlord insurance and buy to let insurance is not a legal requirement. However, many mortgage lenders will insist you have some insurance in place before they will accept you for a buy to let mortgage.
The main insurance required would be buildings insurance but this is not legally required and will usually depend on the lender.
While it’s not legally required, the impact of legal costs, legal liability, and legal expenses can add up. For this reason, it would be safer to get additional insurance like Legal cover to provide any legal expenses cover needed.
Be sure to speak to your insurer to see what insurance is right for you and your budget.
How Much Does Landlord Buy to Let Insurance Cost?
Research from NimbleFins found that the average cost of landlord insurance was £170 in 2021. This was a base price for buildings insurance with no additions on top for a home with a £200k rebuild cost.
Prices for buy to let insurance can vary heavily, though, depending on rebuild value, the type of property, the year it was built, and any optional extras – which can all add up to £1,000 on the high end of the spectrum.
Take a look at the data below to see the average annual price for buy to let insurance on various home types, according to NimbleFins.
How To Cut The Cost Of Landlord Insurance? (10 Ways)
Like with any investment, reducing entry costs and running costs will help maximise your return potential. So, how can you cut the cost of buy to let insurance?
While you can simply opt for the cheapest policy, we don’t recommend doing this as you may lose out on some much needed cover. However, there are ways to reduce the cost of landlord build insurance and contents cover without having to skimp out.
With this in mind, check out the following 10 ways you can save money and still get flexible cover.
- Get an Accurate Rebuild Value – A common mistake for landlords is overestimating the rebuild value on their policy. Remember that the purchase price of the property is not the same as the rebuild, and will often be lower.
- Combine Policies – You’ll often find that insurers will offer policies with optional extras included, like contents insurance, for a discounted price.
- Compare the Market – The best way to get a good deal is to shop around and compare prices using cash comparison sites like GoCompare and ComparetheMarket.
- Find Discounts – While combining policies is a good way to get a discount, you may even get lower prices depending on whether you buy online with a desktop computer or mobile device, and purchasing your cover with one company.
- Consider Increasing the Excess – Just like car insurance, increasing the optional excess will lower the overall cost to you for insuring your rental property. Most buy to let home insurance will typically command an excess of around £100.
- Only Choose Optional Extras if Needed – While a lot of buy to let home insurance is useful, your landlord insurance policy may not need to cover all types. For instance, you won’t need contents insurance if your property is unfurnished.
- Choose Tenants Carefully – The cost of insurance can depend on what type of tenant you have. Working professionals will be the cheapest to insure, while student tenants pose more risks and insurers will charge extra for coverage.
- Invest in Security – Reducing the likelihood of your property getting broken into will naturally save you money on insurance. It’s the same way having an alarm on your car will reduce car insurance costs. For this reason investing in added security like alarms, locks, and even CCTV cameras can help reduce the premium needed.
- Pay Annually Instead of Monthly Instalments – One excellent way to reduce your landlord insurance policy cost is by paying the total sum up front rather than monthly and avoid interest charges.
Be Selective With Your Insurer – By this, we mean choosing a specialist landlord insurer for your home insurance, rather than accepting insurance coverage from buy to let mortgage companies. This is because the BTL mortgage companies will likely charge you extra for unneeded additions to your policy.
Want to learn more about capital gains tax on buy to let? Learn more.
Compare Buy To Let Property Insurance
As mentioned in an earlier section, the best way you can reduce the costs of insuring your rental home is by comparing buy to let property insurance and finding buy to let property insurance quotes. But where should you compare, how do you get the quotes, and what do you need for the quotes?
Find out more below…
How to Get Buy to Let Property Insurance Quotes? Where to Get Home Insurance for Buy to Let Properties?
To compare buy to let property insurance and get buy to let property insurance quotes, you’ll need to use an insurance comparison site.
Currently, the most popular UK insurance comparison sites are:
- Compare the Market
- MoneySuperMarket
- GoCompare
- USwitch
- LV
- Confused.com
What Do I Need to Get a Buy to Let Insurance Quote?
To get an insurance quote, you’ll need a few bits of information. You will need to know:
- The property build date
- Full postcode
- Rebuild cost of the property
- Type of tenants occupying property if you own an HMO
- Information on any claims you’ve made in the past five years – only for the property you need to insure.
Landlord Insurance FAQs
Do You Need Insurance For Buy-To-Let?
No, you don’t need insurance for buy to let property, but some mortgage lenders will require you to at least have buildings insurance on your rental property.
Do You Need Life Insurance For A Buy-to-Let Mortgage?
No, you’re not legally obligated to get life insurance for a mortgage, but some lenders may require you to have life insurance before lending you money.
Why Is Buy To Let Insurance Cover Required?
Buying insurance cover is important for landlords as it protects them for many things that can go wrong for a property owner.
With the right landlord cover, homebuyers can be protected from spending thousands on legal fees and legal expenses, repairing and rebuilding properties, and can save money in the long run. Some insurance can even cover lost rent if new tenants fail to pay rent, which is a huge plus for many homebuyers.
Want to learn more about buy to let property? View our complete guide.
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