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Landlord Insurance Vs. Home Insurance – What Are The Differences?

By Darragh Timlin on August 30th, 2022

What is landlord insurance, and how does it differ from standard homeowner insurance? This is a question that often puzzles first-time landlords that are just stepping into the world of domestic property lettings.

While landlord insurance shares many similarities to standard home insurance, it adds an extra layer of protection against risks that are associated with renting out a property you own rather than living in it yourself.

There is more to landlord’s insurance than buildings and contents cover. Your policy will be tailored to include landlord-specific cover that will protect you from loss of rent, liability cover and tenant default insurance, two risks domestic home insurers don’t worry about.

What Does Landlord Insurance Cover?

There are different types of cover available to landlords that wouldn’t be necessary for a homeowner that resides in the property they own. These other insurances offer protection against additional risks that are present when letting a property, such as:

1: Landlord Buildings’ Insurance: Landlord buildings insurance will cover the costs of any necessary repairs or rebuilds you need should the structure of your property become severely damaged or completely destroyed.

2: Landlord Contents’ Insurance: If you let a fully furnished or part-furnished property, you can take out landlord’s contents insurance. Contents insurance will cover the costs of replacing any furniture items should they be damaged or stolen.

3: Tenant Default Insurance: This is an excellent insurance to take out to cover you for any loss of rent you may experience. You can never guarantee that your tenants will be able to pay their rent consistently. Suppose anything prevents them from paying, such as ending up in hospital for an extended period or losing their job and being unable to cover their rent. In that case, this insurance will cover your losses.

4: Property Owners’ Liability Insurance: Property owners’ liability insurance will protect you in the event that your tenant makes a claim against you for compensation for an injury sustained on the property. For example, if they trip on a loose step or an ill-fitting or frayed carpet.

What’s The Difference Between Landlord & Home Insurance?

When a homeowner takes out insurance, it will usually be for building and contents and maybe household emergency cover to help with urgent issues such as burst pipes or flooding from faulty white goods. It may make you wonder what is landlord insurance for and why it is different from standard home insurance.

Landlords need extra cover to mitigate risks they face when letting to a third party. It usually includes buildings insurance and contents insurance for furniture, fixtures and fittings. But landlords face risks that homeowners don’t, such as being liable should their tenant get injured because of a fault with your property and covering any rent losses should a tenant stop paying rent.

Do I Need Landlord Insurance?

You may think that a standard home insurance policy will cover all your needs for your rental property. However, this type of insurance won’t cover you for the risks associated with letting out a house or flat.

While it isn’t a legal requirement to take out landlord’s insurance to cover your rental property, it may be a condition of being able to get a buy-to-let mortgage. Most mortgage lenders will not grant a buy-to-let mortgage to an applicant, if they have no intention of insuring the property against risks.

It also makes a great deal of sense to take out landlord insurance because you can never guarantee your property will remain safe and secure from risks such as fire, flood and storm damage.

Suppose you are investing in a property to let it out and will rely on the rental income to sustain you. In that case, you have to work out how you will cope and pay your bills without that rental income coming in. This is why taking out tenant default insurance is a sensible move should you be reliant on the rent from the property as your primary income.

How Much Does Landlord Insurance Cost?

There is no one-size-fits-all approach to landlord insurance, so how much your cover will cost you will depend on several factors. The level of insurance will depend on the types of cover you choose, the type of property you are letting out, and the type of tenants you plan to let to.

Just like when you are arranging home insurance for your own home, your insurer will work out the premium for your landlord’s insurance based on how likely it will be that you will make a claim and the possible costs of any claims you make.

The best way to determine how much you are likely to pay for your landlord’s insurance is to get a quote from a specialist business insurance company such as Brisco Business Insurance. Most domestic home insurance companies are not used to dealing with landlords, so they may under or overestimate how much cover your will need.

You may find that your own home insurance provider won’t offer landlords insurance or won’t fully understand the risks associated with letting a property. This could lead to you having inadequate cover to meet your needs.

What Landlord Insurance Will I Need?

The most basic cover you will need is the same as domestic home insurance, which is buildings insurance and contents insurance if you provide furniture, fixtures and fittings. But unlike standard home insurance, you will need liability insurance to protect you against any accidents your tenants may have caused by your property.

It is up to you how much extra coverage you want to add to your landlord’s insurance policy, such as tenant default insurance to protect you from loss of rental income, accidental damage insurance to cover any household emergencies, and landlord legal expenses insurance, too, depending on the risks you want to cover yourself using your own savings.

How Much Landlord Insurance Do I Need?

The amount of landlord’s insurance you need will depend on your individual requirements. It would help if you thought about how much it will cost to rebuild your property completely should it be destroyed in a fire, for example.

Don’t forget to factor in extra expenses such as labour costs, materials and legal fees to rebuild totally from scratch.

If you want to add contents insurance, you need to consider how much it will cost to replace the contents you provide in your rental property. This won’t include any losses to your tenant’s possessions, as they will need to arrange their own contents insurance for that.

It can help to get a free quote for your landlord’s insurance from Brisco Business Insurance to give you an idea of how much coverage you get, but if you need any help or guidance, our team are here to help!

Conclusion

With Brisco Business Insurance, you can choose what cover you want to be rolled into your landlord’s insurance policy. We can tailor-make your insurance policy to meet your needs, including landlord essentials, such as liability and tenant default insurance, that have proven invaluable to many landlords we deal with. Expand your knowledge of business insurance and learn about the different coverage options available at Brisco Business.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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