Is Landlord Insurance Worthwhile?

Is Landlord Insurance Worthwhile
You’ve bought your property and you’ve found a tenant, now the question strikes you – is landlord insurance worthwhile?

It’s a fair question and it’s one that most landlords will struggle with at some point. The thing with all types of insurance is that it is only worthwhile if you need it, yet, you buy it in the hope you never will need to make a claim.

Although some types of insurance, such as car insurance, are legally required, landlord insurance is not. And that means it’s down to you to weigh up the risks of not having landlord insurance against the costs of a decent policy.

Remember that landlord insurance is different from home insurance, so it’s vitally important to get a policy that adequately meets your individual requirements.

So, is landlord insurance worthwhile? That’s a question only you can answer, but here are some factors that may affect your decision…

What Does Landlord Insurance Cover?

Each landlord insurance policy is different so you’ll need to check the wording of the policy documents from the insurance provider you are considering using.

However, some of the commonly included things that are covered include:

  • Liability cover – protecting you against claims that result from people injuring themselves on your property.
  • Buildings insurance – covering you on repair or rebuild costs if your property is damaged.
  • Rehousing costs – if your property is damaged and your tenants need to be temporarily rehoused, this part of your policy will help cover the costs.
  • Subsidence cover – helping protect you against the repair costs should your building suffer from subsidence or landslip

Whether these are covered by your policy, and how much you are covered for, will depend on the policy and provider you choose.

Some policies also include things like accidental damage to the furnishings in your property, loss of rental income if your property is damaged and can’t be lived in, and employers liability insurance for if you employ someone like a gardener or handyman to work on your property.

You’ll need to check policies carefully to ensure they meet your needs both in terms of what is covered and how much it’s covered for.

Do I Need Landlord Insurance?

There is no legal requirement for a landlord to hold a valid landlord insurance policy.  That means, if you own the property outright, the decision is entirely yours.

However, if a mortgage or other lending is being used to finance the ownership of the property, you’ll need to check with your lender.

Many lenders now require you to hold valid landlord insurance, in addition to standard buildings and contents cover, as part of their terms of the loan.

Is Your Property Furnished or Unfurnished?

Unfurnished Rental Property

If you rent out your property or properties in a furnished or part-furnished state then landlord insurance can become even more appealing.

That’s because many properties come with accidental damage cover, or at least offer it as an optional extra. That means you can protect your furnishings from accidental damage by the tenant.

Is landlord insurance worthwhile on unfurnished properties? Again, that will come down to your attitude to risk and your personal circumstances.

It’s worth noting that landlord insurance covers much more than just accidental damage which means it’s still an option worth considering even on unfurnished properties.

Do You Let Multiple Properties?

One policy will often cover you for multiple properties, sometimes as many as ten in one policy.

That means, if you own multiple rental properties, you don’t have to buy a separate policy for every property which may reduce the overall costs of landlord insurance.

Is Landlord Insurance Tax Deductible?

The short answer is yes!

Both landlord insurance and buildings and contents insurance on properties you are renting out are classed as an allowable expense on your tax return.

That means you can deduct the cost from your profits and lower your tax liabilities. This makings landlord insurance much more palatable for many property investors.

Where To Buy Landlord Insurance

Many well-known insurance companies, such as AXA Insurance, offer landlord insurance and there are also many specialist insurance firms who only offer insurance to investors.

Your best bet is to shop around and find out what kind of price you will be looking at before you decide if landlord insurance is worth it for you.

Don’t forget there are also a number of things you can do to help reduce the risks of something major going wrong at your property.

We’ve written guides on how to protect your house from flooding and how to protect your home from fire which will help you make serious damage to your property less likely.

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