It is sensible to ask do I need landlords insurance by law. The answer is no, you don’t, but there are many features of landlord insurance you really shouldn’t be without.
If you are buying a flat to let with a mortgage then it is likely your lender will require you to have adequate buildings cover in place. That is to protect their financial interest in the property even if you don’t care about your own. So while the answer to do I need landlords insurance by law is no, you might still need it anyway.
Do I Need Landlords Insurance by law? Why Leave It?
Buy-to-let property – or any other way you have become a landlord such as through an inheritance – is a form of financial investment. While there can be a philanthropic angle to becoming a landlord, such as helping family, most lettings are to third parties. Whichever way you come at it, it remains the case that becoming a landlord is a lot of work and risk and so the chances are you are looking for a good return on your investment.
Even if you are helping someone in the family by charging just a token amount of rent, you are probably still looking to make large capital gains in the value of the property over time.
But if the property is damaged – or even completely destroyed – then you would lose a significant amount of the money invested in the property.
That is where buildings cover comes in. But normal buildings insurance that you might have for your home isn’t right for let property and an insurer may refuse a claim if you were not the resident at the property. Landlord insurance takes account of the fact your property is let and so can provide buildings cover that is right for you.
Buildings cover is the most fundamental part of landlord insurance and while the answer to do I need landlords insurance by law is no you can see how important it is.
Then there are other benefits thrown in with a good landlord insurance policy. Property owner liability cover means if someone is harmed on or by your property and sues for compensation you have cover for your legal expenses. While these are rare you can get up to £5 million of cover in a simple and affordable landlord policy.
You can also get cover for your own contents at the property like curtains, carpets and appliances. At Emerald Life we provide £5000 of landlord contents cover free.
Is Landlord Insurance Expensive?
The main reason people avoid getting landlord insurance is the idea that it is expensive. There’s an assumption that given the immense cost of buying a property to let and fitting it out, being a landlord requires a lot of money.
Landlord insurance is actually very simple and not expensive. Just as you insure your own home, insuring a let property should not cost much more, although some of it may depend on the type of tenant that you have and the postcode.
Afterall, a let property is not an unoccupied property and so the risk is not that different. Even if you have a HMO or let to students, the fundamental risks insurers consider are bigger things like postcode and the rebuild value of the property.
The most basic of landlord insurance policies cost roughly £200 a year, so there is no reason to fear the expense of this important protection that could pay out hundreds of thousands of pounds if you needed it.
You can also save money on discount landlord insurance in a number of ways like comparing quotes for similar cover from different providers, offering to pay a higher excess in the event of a claim which can reduce your premium and using cashback sites.
What’s The Leasehold Buildings Insurance Law?
If you own a leasehold flat then it is likely that your freeholder is responsible for buildings insurance – although you and your solicitor should check this in your lease. Your lease may also state that it is a requirement for the flat to be insured and whose responsibility that is.
If flat owners own a share of the freehold then you might need to arrange your own buildings insurance. Often a block of flats insurance policy can be the simplest and cheapest way to arrange this.
Article title: do I need landlords insurance by law?