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Buy to let guide

Do I need landlord insurance?

NatWest mortgages are available to over 18s. Your property may be repossessed if you do not keep up repayments on your mortgage. The content on this page is guidance only and does not constitute advice.
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What is landlord insurance?

Landlord insurance covers you for the risks and costs associated with owning rental properties. It could cover you for legal liabilities, property damage and loss of income.

In today’s market, while tenant demand is strong, landlords face many challenges. Regulatory changes, landlord taxes, and economic conditions can make juggling costs and expenses a constant balancing act.

Given these challenges, just how important is a good landlord insurance policy?

What does landlord insurance include?

Standard landlord insurance policies typically start with building insurance and property owners’ liability insurance. These cover the cost of repairing or rebuilding your property and cover any personal injury to a tenant or visitor. As with any insurance policy, what’s included in landlord insurance can vary. So it’s essential to read exactly what’s included before signing up.

Standard buildings and contents landlord insurance normally covers a few key areas such as:

  • fire, flood and theft
  • structural issues
  • built-in or fitted elements, like kitchens and bathrooms
  • items that aren’t owned by the tenant. Such as furniture, curtains and carpets.
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You can also choose to take out extra cover for things like:

  • loss of rental income due to property conditions
  • legal expenses
  • boiler repair and maintenance
  • unpaid rent
  • between-tenant vacancy
  • accidental damage
  • intentional damage
  • public liability.
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How to choose landlord insurance

Consider what’s important to you when deciding on what kind of landlord insurance you need.

If you’re concerned about a tenant being injured on your property, public liability insurance may provide extra peace of mind. If you’re worried about your tenant not being able to pay their rent, rent guarantee insurance can offer reassurance in this area. This covers lost rental income for a period, so that the landlord doesn’t have to take the hit.

You can often add on extras to policies or shop around to find the cover that best suits you. As with any insurance, the more it covers, the more you will usually pay. 

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Is landlord insurance mandatory?

Landlord insurance isn’t mandatory. However, it can offer protection for anyone who rents out properties. It can safeguard against any issues with your property and helps ensure you can meet your responsibilities to your tenants. Cover can foot the bill for anything from boiler repair to other issues that are your remit as the homeowner.

What’s more, some landlords may be obliged to have at least buildings insurance as part of the conditions of their buy-to-let mortgage.

Do I need landlord insurance if renting a room?

Some landlords rent to family, or have a lodger in a single room. How do they fit into the world of insurance and buy-to-let regulations?

Under the UK’s rent-a-room scheme, householders are allowed to earn up to £7,500 a year tax-free by letting out a furnished room in their home (that’s halved if you’re a couple). However, you do need to check you’re eligible and sign up to the scheme.

Landlord insurance is important even for those letting out a furnished room. A typical home insurance policy may not cover all the risks associated with renting out a room. For instance, public liability protection in home insurance does not usually cover accidents involving tenants.

Additionally, if your home became uninhabitable for any reason – for example, if a burst pipe flooded your house – while home insurance might provide alternative accommodation for you and your family, it won't cover the costs of rehoming your tenants. 

Do I need landlord insurance if renting to family?

Plenty of people are landlords to family members. Perhaps because they’ve agreed to rent them a room in their home. Or, a parent might have invested in a flat or house to rent to their adult son or daughter.

For informal agreements, there may not be a need for insurance. However, if a family member is paying rent, the property owner is officially their landlord. So it may make sense to have some extra protection.

A standard home insurance policy may well not extend to an official tenant. Even if they are related to you.

But no matter who you’re acting as a landlord to, it’s worth bearing in mind that you may need to notify your mortgage lender. You may also need to change your mortgage type.

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How much does landlord insurance cost?

The cost of landlord insurance depends on several factors. These include:

  • the location
  • the property value
  • the level of cover
  • any extras required.

The quickest way to find out what a policy will cost is to ask for a personalised quote on your buy to let property.

As with any insurance policy, it shouldn’t be about finding the cheapest cover but the most appropriate option for your needs. That way you shouldn’t be left out of pocket if things go wrong.

There’s a lot to consider when becoming a landlord. Whether it’s to a family member or stranger, or whether it’s a room in your home or a separate investment property. But understanding the risks and how to mitigate them with insurance should be a key consideration.

That way, you can help keep your rental income steady and meet your obligations to your tenants, no matter what. 

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