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What Is Landlord Insurance, and Do You Need It?

Landlord insurance is not the same as conventional home insurance as it covers many things that the latter doesn’t. For example, it will cover not only yourself, but it will also cover both your property and tenants. Home insurance policies do not cover you for letting out your property, and mortgage lenders typically require landlords to take a specialist landlord insurance policy out before they can secure a mortgage with them.

Is landlord insurance legally mandated?

A landlord is not required by law to have a specific insurance policy. Traditional homeowner’s insurance does not cover renting out; if you have a mortgage on your property, your lender may require you to obtain additional insurance before renting it. Prior to renting out your property to tenants, you’ll often want formal approval from your mortgage lender. Failing to obtain this authorisation might result in you violating the conditions of your mortgage.

There is a variety of landlord insurance to cover all eventualities, and these include:

  • Property owner’s liability insurance
  • Contents insurance
  • Buy-to-let building insurance

What about renting out to family members?

As already noted above, a typical home insurance policy will not suffice for renting out your property, and this also applies when renting out to family members. This sometimes catches people off-guard because they assume that family members are different when it comes to insurance cover.

In addition to extra insurance cover, a tenancy agreement is usually required in order for your landlord’s insurance coverage to be legitimate, so make sure you have that in place before renting out your property. Keep in mind that you’ll have to get your mortgage lender’s okay first.

When renting out your property to family members, you may decide that you don’t need a full landlord’s policy, in which case you could perhaps leave out tenant default insurance and legal expenses insurance, and just concentrate on insurance that covers things like building insurance and property owner’s liability insurance.

What if you live in the property?

Even if you reside in the house and rent out a portion of it, which is quite common, a standard home building and contents insurance policy will not cover the rented portion of the property.

So, when you get landlord insurance coverage, you’ll need to notify the insurance provider that you also reside in the house as they’ll need to know.

Landlord Insurance - Living Room

And don’t forget that your landlord’s insurance coverage will only be effective if you have a tenancy agreement in place. Most tenancy agreements usually allow tenants to have exclusive use of at least one room, and you’re not allowed to enter without their permission.

If you’re renting out a portion of your home, be sure to notify your mortgage lender so that you don’t run afoul of the conditions of your mortgage loan.

Is landlord insurance required if you have building insurance?

If you want to rent out your property, be sure to double-check with your insurance provider to be sure your building insurance policy is still in effect. Landlord insurance policies are often required, and these policies can cover anything from structures to contents property and owner’s liability insurance.

A separate landlord insurance policy may be unnecessary if your existing building insurance policy can be amended to include coverage for your rental activities, but if it can’t, you’ll need to purchase one to cover rental-related risks such as landlord liability, tenant default, and legal expenses. Although they aren’t mandated by law, it’s a good idea to find out whether your mortgage lender requires this. Each lender operates differently and has different criteria to be met.

Is landlord insurance needed for renting out a room?

Your house insurance may not be valid if you rent out a room in a property you also reside in, such as if you have lodgers. A majority of house insurance plans stipulate that only the policyholder and their immediate family members are permitted to occupy the residence.

If you have a lodger, it’s a good idea to contact your insurance company to see if they can alter your policy to reflect this fact.

A tenancy agreement with your lodger is likely to be a requirement of your policy if you get landlord insurance. In most cases, your lodger will have exclusive use of at least one room in your home, and you will not be able to enter this area until they grant you permission.

Your property is legally deemed a multiple house of multiple occupancy (HMO) if you rent out rooms to three or more individuals from separate households. Get in touch with your local council to inquire about obtaining an HMO permit. For HMOs, you’ll need landlord insurance coverage to protect your structure and its contents from damage.

As you can see from the above, landlord insurance is not as straight forward as some would think it is and comes in various forms. It’s a good idea to talk to your home insurance company to get professional advice about your buy-to-let insurance needs.


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