Landlord Building & Contents Insurance Guide

Before I start driving through the details of Landlord Building Insurance, I want to very quickly explain its overall place in the world of landlord insurance.

‘Landlord Building & Content Insurance’ is a type of landlord insurance, along with several others, such as Landlord Rent Guarantee Insurance (RGI), Landlord Maintenance, Emergency & Boiler Cover Insurance and so on. Each type generally has it’s own purpose, but it’s entirely possible for one policy to cover multiple areas. For example, some policies can provide coverage for building, contents and RGI. Of course, it’s also possible to obtain individual policies from different (or the same) companies that cover different scenarios.

Please go to the landlord insurance blog post for an overview of the types of insurances available for landlords.

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Get quick and easy Landlord Building Insurance quotes

First and foremost, if you haven’t got a policy, or if you’re looking to renew your existing landlord building insurance policy, or if you’re simply looking for quotes, then I highly recommend talking to a specialised insurance broker, so you get access to professional advice and a selection or products.

I personally use QuoteSearcher to connect me with an insurance broker to provide quotes. I’ve successfully used and partnered with them for several years now, which is why I don’t hesitate in recommending them.

If you click on the ‘quote’ button below, you will be directed to a landlord insurance form, which will connect you with a specialised QuoteSearcher broker, who can assist with running through your requirements and the options available. I recently renewed my landlord Insurance policy by using the quote form and saved £260, and it only took 20 minutes to get everything up and running. There is no obligation and receiving the quotes is 100% free.

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What is Landlord Building Insurance?

It’s a policy which covers your property from any damage, which may include fire, vandalism or malicious damage, natural disasters, and subsidence etc.

There are literally hundreds of products available on the market, and new ones are being introduced every day, so it’s important to use due diligence when choosing the best policy to suit your needs. An insurance broker should be able to provide assistance and guide you in the right direction. You can talk to a broker today, by filling in this form (there is no obligation and it’s completely free)!

What affects the cost of Building Insurance?

The cost of building insurance, whether it be residential or landlord, will depend on several factors, including:

• Insurance company (each will value and assess risk differently)
• Value of property
• Location of property
• Size of property
• Local crime rates
• Environmental risks e.g. flooding
• Previous claims
• Smoke/burglar alarm installation
• The number of occupiers
• Occupation, specifically if you work from home

Why is Landlord Building Insurance so Iimportant?

Yup, it’s a no-brainer. Or at least I hope it is.

Buy-to-let properties are large investments, probably your single largest investment (besides from your own residential home), so you need to protect your money in the event of unforeseen disaster. Believe me when I say disaster often strikes in this industry; the world of landlord is fickle and unpredictable at best.

The maths for “why” is simple: pay approximately £150 a year for insurance, or stand to lose your entire investment by an accidental fire. Not to mention, you’ll still be liable to pay the mortgage- imagine how demoralising that would be, paying off debt for a pile of rubble?

Do I legally need Building Insurance to rent my Property?

No – building insurance is currently not a legal requirement for landlords in England & Wales, but for the reasons mentioned above, it’s not worth going without.

Is there a difference between “Home Insurance” and “Landlord Insurance”?

Yes, there is a difference, and it’s crucial to get “Landlord Building Insurance” if you’re letting your property.

Landlord insurance can be slightly more costly than regular home insurance, so a lot of landlords opt for “home insurance”, assuming they’ll still be covered but at a lower rate. It’s a common mistake that can cost thousands and thousands of pounds.

In most cases, “Home Insurance” polices will NOT cover any claims made in a buy-to-let property. In fact, the insurance policy will most likely be invalid.

Needless to say, Home Insurance covers residential properties, while Landlord Insurance covers buy-to-let properties.

Do I need Contents Insurance?

Landlord building insurance is considered essential, but that’s not always the case with ‘contents’ insurance.

If your property is “furnished” then it’s definitely worth getting content insurance. Additionally, if white goods (cooker, oven, fridge, freezer etc.) are provided by the landlord, which it generally is.

If you do opt for contents insurance, it’s important to be wary of how much you’re covered for. For example, if there is a fire and the kitchen is completely destroyed and you’re only covered for £4,000, you need to consider whether that will be enough to cover all the contents to be replaced. Avoid under-insuring, it’s important not to under value the cost of replacing your contents.

On a sidenote, it’s typically the tenants’ responsibility to insure his/her own personal possessions if they wish to, via their own tenants contents insurance policy.

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Why do I pay more/less for Landlord Insurance policy than other people?

You’ve been gossiping amongst fellow landlords and the contrasting rates have confused you, right?

There are typically two common reasons for why insurance policies can vary in price, even when the properties themselves are very similar:

• Insurance premiums are based on the risk and crime levels in different areas.

  Usually insurance companies use postcodes to cross reference police records and their own insurance claims history for the area to assess the risk. So your landlord insurance premium will be based on the stats; it’s nothing personal, and you’re not necessarily getting ripped off. Although, there’s a lot to be said for shopping around to get the best quotes.

• There are thousand of insurance policies available, so naturally not all of them are ‘like-for-like’. For example, some policies are cheaper simply because they provide less coverage.

  So if you’re going to compare policies, it’s important to ensure they’re providing the same coverage.

Top Tips for taking out Landlord Insurance

Understand what your landlord policy covers!

This may seem obvious, but landlords failing to understand what their policy covers is one of the main reasons why many claims are unsuccessful.

Landlord insurance will NOT cover everything, so it’s important to check what your policy covers when you’re getting quotes. If there is something specific you require, for example, ‘malicious damage by tenants’ (which is a perfectly reasonable requirement for landlords), then it’s important to read the terms and conditions to ensure it’s covered. You should also always ask your insurance broker to find a policy which covers your requirements.

Here are a couple of other things landlords may want their insurance policy to cover, but aren’t necessarily standard:

• Malicious damage by tenants
• Flood damage
• Accidental damage
• Rent arrears rent
• Legal cover (including eviction costs)

This leads me onto my next point nicely…

Landlord Insurance and Fair Wear & Tear

First and foremost, it’s crucial to understand what ‘Fair Wear & Tear’ is, because insurance will not cover any damage due to fair wear and tear. You can read more about it in my Fair Wear & Tear Guide.

Essentially, wear and tear is damage caused by normal living, which is through no fault of the tenant. For example, carpets will naturally wear over time, and it doesn’t mean intentional damage was caused. So landlords won’t be able to make a claim in that case. However, if there is paint spilt on the carpet, or cigarette burns, then the landlord may have a claim (assuming their policy covers malicious damage by tenants) because those incidents didn’t occur naturally.

Many landlords wrongfully try and make a claim for wear and tear, only to be unsuccessful. Damage due to fair wear and tear is a ‘business expense’ which landlords are expected to cover as part of their business.

Don’t Underinsure

I already briefly touched on the subject of under-insuring, but I’ll quickly cover it again, because it’s so important!

Many landlords try and get the cheapest insurance policy possible, which may seem like a great money-saving tactic at the time, but it’s often the main reasons for being underinsured.

A common scenario is when a policy is taken out for less than the properties actual value, which can result in claims being reduced proportionally. For example, if the cost of rebuilding your property is £100,000 but you insure it for half that, £50,000, you will only be able to claim 50% for the cost of repair. So if you make a claim for £5000 to repair a damaged kitchen after a fire, you will just get £2500, not the full £5000.

Most insurers won’t cover properties that are empty for 30+ days

Be warned.

A lot of insurers impose a “30 day rule”, which effectively means your insurance will be invalidated if your property is unoccupied for 30+ days. However, some insurers are more lenient than others, and you can find ones that allow for either 60 or 90 day vacancy periods. It’s best to check your policy to determine how long your property can remain empty for before your policy becomes invalid.

Most landlords won’t have their properties empty more than 30 days. However, it is perfectly normal for rental properties to be empty for extended periods of time under certain circumstances, particular during refurbishment and/or in-between tenancies (especially during a slow market).

• If your property is due to be vacant for a period that exceeds your current policy’s vacant period allowance, you should notify your insurance provider. If your insurer doesn’t provide Unoccupied Property Insurance, you can quickly compare prices from simplybusiness.co.uk.
• If it’s likely that your property is frequently empty for extended periods of time throughout the year, you may want to find a policy that provides cover for rental properties that are empty for 60+ days, so you don’t need to continually purchase unoccupied property insurance.

Flood Protection

This won’t apply to most landlords, but it should be taken seriously by landlords that have properties in areas that are prone to flooding.

Consider whether you need your building cover to protect your against flooding damage, or if it would be a sensible safety precaution… just in case (i.e. you may have had a few close calls in the past)! But be warned, not all insurers cover flood damage, and there is usually an extra premium to include it.

For more details on how landlord flood insurance works and what to do in the unfortunate event, please go to the Landlord Flood Insurance & Flood Damage post.

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Keeping records up to date with your Insurer

This is crucial.

Insurers are notorious for finding ways to withhold from paying out when a claim is filed. If they can find a reason not to pay out, they will, so it’s in your best interest not to give them one.

If there’s ever a change in circumstance, inform your insurer immediately so they can update your policy. Changes include:

• New tenants
• A tenant moves out e.g. divorce/separation
• If the property is going to remain empty/vacant

If you don’t update your policy by informing your insurer, or at least enquiry whether you need to or not, you may find yourself with an invalid policy.