The Cost of Landlord Insurance UK

Landlord insurance is a type of cover specifically designed for property owners who let out homes, flats, or commercial buildings. While standard home insurance may cover a property owner living in their own home, landlord insurance is meant to protect against the unique risks landlords face.

Here’s a look at what affects the cost of landlord insurance. We will cover what is usually included. We will also discuss how to find the right policy at the right price.

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1. What Determines the Cost of Landlord Insurance?

Several factors come into play when it comes to the cost of landlord insurance. Each property and tenancy has unique characteristics, and insurers calculate the premium based on risks associated with the following:

• Property Location
• Properties in certain postcodes may carry a higher insurance premium, particularly in areas with higher crime rates or flood risks. Similarly, high-value areas can also see higher premiums.
• Property Type and Size
• Older properties and properties with non-standard features, such as a thatched roof, may cost more to insure. Additionally, larger properties with multiple tenants may increase costs due to the higher risk involved.
• Tenant Type
• Who you rent to also affects premiums. Renting to students, for instance, often leads to a higher premium compared to professional tenants, due to perceived risk. In some cases, insurers may offer different pricing structures for families, professionals, and other tenant groups.
• Insurance Cover Options
• The type and extent of cover chosen play a big role. For example, a comprehensive policy that covers building, contents, and liability costs more than a basic policy. A basic policy only includes building insurance.
• Excess Level
• Voluntary excess is the amount a landlord pays before insurance starts. This choice can impact the overall premium. Higher excess can mean lower premiums but involves more out-of-pocket risk if a claim is made.

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2. What Does Landlord Insurance Cover?

Typically it can provide protection in the following areas:

• Building Cover
• This helps protect the physical structure of the property, including walls, roof, and other permanent fixtures. This cover is essential for properties with mortgages, as lenders often require it to safeguard the asset.
• Contents Cover
• Contents cover protects items owned by the landlord within the property, such as furnishings, appliances, and sometimes carpets. Note that contents insurance does not usually cover the tenant’s belongings.
• Liability Insurance
• Liability insurance helps pay for legal costs and damages. This applies if a tenant, visitor, or member of the public is injured.
• It also applies if there is damage to their property. This damage or injury must be connected to the rental property. This can be especially important in cases involving legal claims, as these costs can be substantial.
• Loss of Rent and Alternative Accommodation
• Some policies provide coverage for lost rental income if the property cannot be lived in. This can happen due to events like a fire or flood. It may also cover the cost of temporary accommodation for tenants in certain cases.
• Legal Expenses
• Cover for legal expenses may be included or available as an add-on. This can be beneficial in cases of tenant disputes, eviction proceedings, or dealing with property damage issues that may require legal action.

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3. Average Costs of Landlord Insurance in the UK

The cost of landlord insurance varies widely based on the above factors. However, to provide a general idea:

• Basic Building Insurance: Policies covering just the building typically start around £120 to £200 annually, depending on location and property type.
• Building and Contents Insurance: This cover is likely to range from £200 to £300 per year, especially if higher contents cover limits are required.
• Comprehensive Packages: Landlords seeking building, contents, and liability cover, along with additional options like loss of rent and legal expenses, might expect to pay between £300 to £500 per year.

These figures are averages and can be impacted significantly by customisation, as well as specific provider policies.

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4. Tips for Reducing Landlord Insurance Premiums

While it’s important to avoid skimping on essential cover, there are ways landlords can help reduce their premium:

• Increase Security Measures
• Installing security systems, better locks, and fire safety equipment can lower premiums by reducing perceived risk.
• Bundle Policies
• Some insurers offer discounts for bundling multiple properties or combining landlord insurance with other types of cover.
• Choose a Higher Excess
• As mentioned, opting for a higher voluntary excess can reduce the overall premium. However, landlords should ensure this excess is affordable if a claim arises.
• Avoid Making Small Claims
• Frequent claims can raise your insurance premiums. It’s usually better to pay for small repairs yourself. This helps keep your claim history clean.

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5. Should You Choose Monthly or Annual Payments?

You can pay landlord insurance premiums monthly or annually, and some providers offer discounts for upfront annual payments. While monthly payments provide flexibility, they may incur interest, making the total cost higher than an annual payment. Consider budget and cash flow needs when deciding.

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6. Reviewing and Comparing Policies

To get good value, compare a variety of policies from different providers. There are many cover options available. Not all policies offer the same level of cover, so landlords should read the fine print, check exclusions, and be clear about what’s included.

By understanding the factors that influence landlord insurance costs and taking proactive steps to manage risks, landlords can find a balance between quality cover and affordability.

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7. Common Exclusions to Watch For

Landlord insurance policies often include exclusions that are important to understand. These can vary between providers, but common examples include:

• Wear and Tear
  Insurance typically doesn’t cover gradual damage, such as worn carpets or aging boilers. These are considered part of property maintenance responsibilities.
• Unoccupied Properties
  If a property remains vacant for an extended period, some policies may not provide cover. Landlords should notify their insurer if a property is unoccupied for more than 30 or 60 days, depending on the terms of the policy.
• Deliberate Tenant Damage
  Damage caused intentionally by tenants may not always be covered. Landlords should clarify this when selecting a policy and consider optional add-ons, where available.
• Certain Natural Disasters
  While events like storms and floods are usually covered, some policies exclude rare natural disasters, so it’s worth confirming what’s included.
• Subletting Without Consent
  If tenants sublet a property without permission, it can void the insurance cover. Landlords need to address this in their tenancy agreements and notify the insurer if subletting is permitted.

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8. When Should You Review Your Policy?

Landlord insurance isn’t a one-and-done decision. It’s crucial to review your policy regularly to ensure it still meets your needs, particularly if:

• You’ve made significant renovations or upgrades to the property.
• Your tenant type has changed (e.g., switching from students to families).
• You’ve purchased additional properties or consolidated your portfolio.
• New risks emerge, such as localised flood risks or increased crime rates.

A periodic review helps ensure the property is adequately covered and avoids unexpected surprises in case of a claim.

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9. How to Choose the Right Insurer

Finding the right insurer involves more than just comparing prices. Landlords should also look at:

• Claims Process
  A good claims process is straightforward, efficient, and responsive. Reading reviews from other landlords can provide insights into how a company handles claims.
• Customer Support
  A reliable customer service team can make a huge difference when dealing with queries or issues.
• Customisation Options
  The ability to tailor a policy to cover only what’s necessary can prevent landlords from overpaying for unnecessary cover.

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Final Thoughts

Landlord insurance is an essential cost of being a property owner. It helps protect against financial loss and unexpected risks that could otherwise be difficult to manage. While the upfront cost might feel like another expense, it can provide peace of mind knowing your investment is well-protected.

By shopping smartly, understanding your needs, and being proactive about risk management, landlords can find a policy that fits their budget while providing robust cover. Balancing affordability with comprehensive protection ensures that landlords can focus on what matters most - maintaining a successful rental business.

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