A landlord needs special buildings and contents insurance specifically for landlords and landlord liability insurance – regular homeowner insurance typically does not cover property let out to tenants. While there are additional coverages you might want as well, this article will explain how the key components of landlords insurance cover work.
Landlord building and contents insurance
Landlord building and contents insurance protect against damage to anything structurally with the property, as well as what is inside.
Building insurance is the main feature of landlord insurance, although contents insurance can often be an extra part of the policy. Building insurance covers damage to a property’s main structure and anything permanently fixed to it. A landlord can claim on it for damage to parts of the home, including:
- Walls
- Wires and cables
- Windows
- Fences and gates
- Patios and yards
- Pipes
- Guttering and ducting
- Doors
- Permanent fixtures such as fitted kitchen, bathroom, fitted wardrobes, tiles, door frames, window ledges, locks
- Pavements and car parks
- Boilers – this can come as an extra on some policies
A landlord can claim against building insurance if the damage is caused by:
- Natural crisis: Storm, lightning, flood, earthquake,
- Disorderly behaviour: Riot, malicious destruction, theft, robbery
- Other unexpected issue: Explosion, fire
Contents insurance covers all non-fixed items in a property. While there is a greater need for contents insurance for a furnished home, those renting non-furnished properties may also wish to consider contents insurance. Items such as curtain poles, carpets, and some laminate flooring are not covered by building insurance but are protected by contents insurance.
The test, according to the Financial Ombudsman, is if it can be “reasonably removed and taken to another home”. If it can, then the item falls under contents insurance.
Non-furnished homes also typically include some free-standing white goods, which would also fall under contents insurance, such as fridge, freezer, washing machine, free-standing oven.
And there are the other items in a furnished home covered by contents insurance, such as sofas, beds, table and chairs, wardrobes, desks, bedside tables, televisions, microwaves, lamps and internet routers.
Landlord liability insurance
Good landlords insurance cover includes landlord liability insurance, which covers a property owner if he or she could be blamed for an injury or damage to an item in or near the rented home. The injury or damage could be to a tenant but also to another third party. One example is if a tenant tripped over a broken fixture and broke their leg, the liability insurance would cover legal and compensation costs a landlord is required to pay.
Landlord liability insurance can also cover damage to a neighbouring property caused by something that went wrong in the rented accommodation. For example, a water leak could spill over into a neighbour’s property, causing damage to their walls or ceilings. The liability insurance would pay for repairs or other compensation costs, plus potential legal fees.
While a landlord will want to protect the structural parts of their property, they also need to remember they have a duty of care to their tenants or tradesmen – meaning they also have potential liability if something happens to them in the home.
Landlord insurance malicious damage cover
Landlord insurance can include malicious damage cover, but this does differ from policy to policy.
Malicious damage comes under criminal damage in the eyes of the law. It’s defined as someone harming or destroying someone else’s property without lawful excuse, according to the Crown Prosecution Service. This can include a burglar smashing a window to gain entry to a property or someone kicking a door down in the act of vandalism.
Under the terms of landlord building insurance, the building itself and fixtures and fittings attached to it will be covered for malicious damage. Building insurance is the main aspect of landlord insurance, so malicious damage cover should be in place as standard for bricks and mortar.
When it comes to a property’s contents, that can be a little harder to resolutely confirm, as this is where policies start to differ.
Contents insurance is not necessarily standard on a basic landlord insurance policy. If contents are not included, then malicious damage cover will not apply here. Some contents insurance does not include malicious damage. This may need to be bolted on as an extra.
And lastly, some insurers only cover malicious damage by someone other than the tenant or other people lawfully on the property like an employee. In these cases, malicious damage by a tenant can sometimes be another added extra. Occasionally a property will not qualify for malicious damage by a tenant, with some excluding properties with students.
Accidental damage insurance does include damage to contents caused by a tenant, such as staining a sofa or someone walking into a cabinet door and knocking it off its hinges; an incident will only qualify if it was an accident. Damage made on purpose will not be covered.
A landlord can retrieve the costs of malicious damage by a tenant from the deposit paid at the beginning of the rental agreement. The tenant can also be evicted under laws in England and Wales. Eviction battles are time-consuming and can be costly, starting with a written notice period, then applying to the court for a possession order if the tenants still have not left. This cost can be met if a property owner’s landlord insurance includes legal cover.
To avoid having to rely on malicious damage cover for a tenant, landlords or their property managers should compile a detailed inventory signed by those renting the property. Regular property inspections are also advised, as is carrying out a thorough reference check and even potentially requesting a guarantor as terms of the rental agreement.
Landlords increasingly demand a high-security deposit before a rental agreement is signed. Tenants are more likely to treat the property with care if they know a large amount of money is being held.