What is landlord insurance?
Landlord insurance is a form of property insurance designed with landlords and owners of buy to let property in mind.
Not only does it offer protection against the risk of loss or damage to the let property itself – against a wide range of perils such as fire, flooding, storm damage, impacts, theft and vandalism – but also provides indemnity against common liabilities faced by landlords and the risk of lost rental income following a major insured event which leaves the property temporarily unusable.
Is it different to standard home insurance?
The short answer is yes.
Insurers need to know the use to which your property is being put. If it is the home of an owner occupier, the insured risks are quite different to those of a residential property let to tenants.
It is that difference in use – the home of an owner occupier and premises let to tenants as part of a business – that makes landlord insurance the necessary choice if the premises are let.
Is it obligatory?
You have no legal obligation to arrange landlord insurance – although it is clearly a prudent form of defence against the risks and perils which threaten what is likely to have been a significant investment on your part.
The exception is when you are buying your let property with the help of a mortgage and, in that case, your mortgage lender is almost certain to make landlord insurance an obligatory condition of the terms of the loan.
What happens to the insurance cover when the let property is empty?
In any let property business, there are likely to be occasions when the premises remain unlet and empty of tenants for some time – voids between one set of tenants leaving, before the next ones arrive, for example, or when the property is undergoing significant refurbishment and repairs.
In those circumstances, your landlord insurance is unlikely to provide the protection you need, once the property has been unoccupied for longer than a month or so (the exact period varies from one insurer to another) – and, instead, you need standalone unoccupied property insurance for the period your let property remains empty.
Why is specialist insurance necessary?
When your let property has been unoccupied for more than a month or so, your landlord insurance is typically subject to restrictions or may lapse altogether.
This is because insurers recognise the additional threats to which any empty property may be vulnerable:
- otherwise routine repairs and maintenance issues may develop into more serious incidents if there is no one on the premises to raise the alarm; and
- unoccupied properties are more vulnerable to vandals, squatters and other intruders, especially at certain times of the year, report property managers, the VPS Group – and it is not only the type of high-end property described by the Guardian newspaper on the 27th of January 2017 that may be a target for squatters.
Throughout the period that your let property remains unoccupied, therefore, you might want to make certain of the continued protection given by specialist unoccupied property insurance.