Landlord insurance

Many landlords believe that dealing with troublesome tenants are just part of the business of renting out properties. However, it doesn’t have to be this way. There are insurance products available that will help landlords to protect their investments and income.

No matter how cautious and meticulous you are as a landlord, it can be hard to find good tenants who will maintain the property as well as paying their rent on time. Bad tenants are becoming an ever-increasing problem, and Landlord Insurance is a great way for you to get peace of mind, as well as saving yourself a pretty penny if you ever do need to evict someone.

In This Guide:

What is landlord insurance and what does it cover?

Landlord insurance is a form of insurance policy specifically catering to landlords who are renting out a property in order to generate an income. These policies usually cover many of the unfortunate events that could affect your income as a landlord. These can include:

  • The tenant causing malicious damage to your property

  • The tenant refusing to pay rent

  • Any loss of earnings due to damage or the tenant making the property uninhabitable

  • Damage to the structures that lead to water damage

If you are also looking for a building insurance policy, you should take into consideration the above factors when you to make sure your policy covers what you need.

Why do you need landlord insurance?

Many tenants are now becoming aware of their rights as per the law of the land. Usually this would be a good thing, however an increasing number of tenants are using the law to stay in a property without paying the rent that has been agreed. As immoral as this may be, it is still technically legal as there is a due process that needs to be observed if a landlord is to ever evict a non-paying tenant.

However, it can take months to evict a tenant who is playing this game, and in the mean time it is the landlord who suffers. Remember, the bank doesn’t care whether your tenant has paid or not, they will still require you to pay the bond.

So it is advisable to take out a landlord insurance policy even just to cover the cost of rent when a tenant fails to pay.

How does landlord insurance work?

There are two forms of landlord insurance cover:

  • The insurer collects rent from the tenant on the landlord’s behalf and automatically pays out if the tenant ever defaults on payment.
  • The landlord collects rent directly from the tenant and the insurance company pays out when receiving notification from the landlord that the tenant has not paid. This payment will be made after a certain time period - anywhere from 2 to 30 days depending on the insurance company and specific policy at hand.

How much will I need to pay in premiums?

The premiums that you pay will be a percentage of the rental being charged.

How much can I claim?

Policies are also usually limited to a specific number of months that can be claimed for.

There are, however, insurers who will insure the landlord for a particular sum of money and will allow the landlord to continue claiming until that amount has been fully claimed.

Is there a limit to how much I can be insured for?

Some insurers will cap the amount of rent that they are willing to cover - however this amount is usually quite high. It is also worth noting that many insurers won’t insure a landlord if the amount of rent is below a certain figure.

Will my insurer vet my tenant?

Some insurers won’t provide cover unless they vet the tenant themselves. They will look at the tenant’s credit record, bank statements and even speak to their employer before making a decision.

Will my insurance cover the cost of an eviction?

The legal costs of the eviction can be quite high, and so the good news is that most policies do cover the expenses accrued when evicting a tenant. This can be invaluable because in most cases, by the time a landlord decides to evict a tenant, they are already significantly out of pocket already.

Should I get landlord insurance?

The short answer is: yes. The laws in recent times have been relaxed in favour of the tenant, and many tenants really do push things to the limit when exercising their ‘rights’. Landlords need to take the necessary precautions to protect themselves if such a situation arises, especially given that it can be quite hard to find responsible tenants who pay rent each month regularly these days.

How do I compare landlord insurance policies?

The best way to compare landlord insurance policies is to use a price comparison site like ours in order to save yourself time and energy. All you have to do is fill in the details of your rental property and we’ll automatically source the best insurance quotes that suit your needs within minutes.

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