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What Does Landlord Insurance Cover for Rental Properties?

When you are renting out a property you need landlord insurance. This is sold as a package from insurers and is designed specifically for rental properties as normal homeowners’ insurance is not suitable.

Predominantly, this insurance will include liability insurance in case of someone being injured at the property and landlord building insurance to protect against things such as fire, flood or theft.

Further types of cover can be added to the package depending on your needs. It is important to compare landlord insurance to make sure you are getting the right cover for you and your property, as not all providers will offer the same.

The types of landlord insurance available include:

  • Property owners’ liability insurance for protection against claims of injury to a tenant or visitor, or damage to their property.
  • Landlord building insurance, which covers the property against damage from fire, explosion, flood, vandalism, theft and other risks.
  • Landlord contents cover, which will cover furniture or furnishing if the property is fully furnished, or even the carpets and curtains if not.
  • Accidental damage from unexpected accidents such as a broken window or tap being left on.
  • Rent guarantee, which is sometimes called tenant default insurance, for non-payment of rent.
  • Loss of rental income in the case that the tenant has been forced to leave the property due to substantial flood or fire.
  • Legal expenses to finance legal teams and costs in fighting issues such as contract disputes and debt recovery.

Do I need homeowners’ insurance for a rental property?

No, you do not need homeowner’s insurance for a rental property. However, as you are renting the property to a third person, there are many risks from which the landlord needs protection. In addition, homeowners’ insurance will not cover rental properties, so you need to have building insurance for landlords.

Landlord insurance is a package of different types of cover to protect against issues such as flood and fire, injury to a tenant, non-payment of rent etc. There are a number of different types of cover available, but not all providers offer the same.

A basic landlord insurance package includes building insurance and landlord liability insurance.

Commercial buildings insurance protects the property and anything permanently attached to it, like baths and fences, from damage and destruction caused by incidents including fire, theft or flooding. It can also include cover to pay for accommodation for the tenant in the event they need to stay elsewhere if the property becomes inhabitable due to any of these incidents while repair works are carried out. If you don’t have this as part of the cover, you may need loss of income insurance.

Building insurance does not include things such as carpets and curtains, so even if the property is let unfurnished, you may need contents insurance to cover these items in case of damage. In addition, the tenant would need their own insurance to cover their own belongings inside the property.

Buildings insurance is sold in two ways – all risk and certain risk. All risks will cover every risk except those that are specified in the contract. Certain risk only covers the incidents that are mentioned in the contract.

Also included in a basic landlord policy, Landlord liability insurance protects property owners if a tenant or visitor sues them for injury or damage to their property.

Other types of cover, such as contents or rent guarantee, can be added to a landlord insurance package to form one policy.

Personal finance and data research website NimbleFins lists the types of landlord cover available to help prospective policyholders decide what they need to consider before purchasing insurance.

Do you need public liability insurance for a rental property?

If you are renting out as a private property owner or landlord, you do not need a single public liability insurance policy for a rental property. Instead, you should consider having a specialist liability cover as part of your landlord insurance package. This type of cover is called property owner’s liability insurance, not public liability insurance, though it covers the same things.

As you are renting out the property, you are liable to be sued by tenants and visitors for injuries or damage to their property while at the address. This could include something like a visitor tripping on a loose carpet edge and being injured or part of a poorly maintained tree falling onto and damaging a car. In this sort of instance, the injured party can claim the property owner is to blame and could sue.

Property owner’s liability insurance is normally part of the landlord insurance policy and can be included at no extra cost. Still, it is important to check it is in your policy. It offers valuable protection against claims.

It covers legal costs and compensation if the owner is found liable.

While property owner’s liability insurance is not a legal requirement for renting out a property, it can be part of the mortgage contract. Either way, it is a sensible option to protect as high legal defence costs, and compensation could be substantial.

For businesses, this sort of insurance cover can be provided in a public liability insurance policy. The difference between to two insurance types is the policyholder.

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