Do You Really Need Landlord Insurance? A Guide for First-Time Landlords
Becoming a landlord can be a rewarding and financially strategic move, offering a reliable stream of income and the potential for long-term capital growth. But it also introduces a range of risks—from damage to your property to potential legal liabilities—that can quickly erode your returns if left unprotected. One area that many first-time landlords underestimate is the need for landlord insurance.
In this comprehensive guide, we break down what landlord insurance covers, why it matters, how much it costs in the UK, and how to choose the right policy to protect your investment.
What Is Landlord Insurance?
Landlord insurance is a specific type of insurance policy designed to cover rental properties. It differs significantly from standard home insurance, which is intended for owner-occupied properties.
A standard home insurance policy generally won't pay out if you rent your property to tenants, leaving you exposed in the event of a claim. In contrast, landlord insurance provides protection for rental income, tenant-related liability, malicious damage, and more.
Key Differences: Landlord Insurance vs Home Insurance
| Feature | Home Insurance | Landlord Insurance |
|---|---|---|
| Covers rented properties | ❌ | ✅ |
| Loss of rental income | ❌ | ✅ |
| Liability protection (tenant injuries) | ❌ | ✅ |
| Malicious damage by tenants | ❌ (usually excluded) | ✅ (if included) |
| Tenant default cover | ❌ | ✅ (optional) |
While both policy types protect the building and its fixtures, landlord insurance is built around the commercial reality of renting to tenants—making it a must-have if you want to protect your property portfolio, no matter how small.
What Does Landlord Insurance Cover?
Property Damage
This core cover protects against structural damage to the building caused by fire, flood, storm, subsidence, or vandalism. Policies typically include outbuildings (e.g. garages or sheds), walls, gates, and fences.
Example: If a tenant accidentally starts a kitchen fire, the repair cost could run into thousands. Without insurance, you'd be footing the bill.
Liability Protection
Covers legal expenses and compensation if a tenant or visitor suffers injury due to something on the property for which you’re legally liable.
Example: A broken step causes a tenant to fall and break their ankle. If you’re found negligent, landlord liability cover would handle medical costs and legal fees.
Loss of Rent
If your property becomes uninhabitable due to an insured event, such as a fire or major escape of water, loss of rent cover reimburses you for the rental income you'd otherwise have lost while repairs are underway.
Stat: According to Compare the Market, 17% of landlord claims in the UK are for loss of rent following serious damage.
Optional Extras Worth Considering
Depending on your specific risk profile, adding optional extras to your policy can make a significant difference.
Malicious Damage or Theft by Tenants
Standard policies may exclude tenant-inflicted damage. Malicious damage cover protects you from deliberate destruction, such as holes punched in walls or smashed fixtures.
Accidental Damage
Adds coverage for unintentional damage caused by tenants—like a wine spill on the carpet or a cracked bathroom basin.
Flood and Natural Disaster Insurance
Standard landlord insurance usually excludes flooding, especially if your property is in a high-risk zone. In England, landlords can access affordable cover via Flood Re, provided their property qualifies.
Building Regulations and Code Upgrades
If you’re forced to make upgrades during repairs to meet current building codes (e.g., installing fire doors or updating wiring), this cover picks up the difference.
Tenant Default Cover
Protects you if a tenant fails to pay rent. While not all insurers offer this as standard, it can be crucial—particularly during economic downturns or if you rent to students or lower-income tenants.
Common Exclusions in Landlord Insurance Policies
Like any insurance, landlord policies come with exclusions. Knowing these up front helps avoid nasty surprises:
- Tenant Belongings: Landlord insurance only covers the structure and your contents (e.g., appliances or furniture). Tenants should get their own renters insurance.
- Maintenance Issues: Gradual wear and tear, such as damp from poor ventilation or rot from lack of maintenance, is not covered.
- Unoccupied Properties: Most policies have rules around unoccupied periods (typically 30–60 days). If the property is empty beyond that, you may need unoccupied property insurance.
- Illegal Subletting or Use: Claims may be denied if the tenant was subletting illegally or using the property for unlawful purposes.
How Much Does Landlord Insurance Cost in the UK?
The cost varies depending on the location, property type, tenant profile, and level of cover.
- Average cost in the UK: £170–£300 per year (for a single buy-to-let property)
- More expensive areas: London and the South East tend to be at the higher end of the range.
- Premiums typically 25–30% higher than standard home insurance, due to increased risks.
Example: If your home insurance is £200/year, your landlord insurance may cost closer to £260–£300.
What Affects Your Premium?
| Factor | Impact |
|---|---|
| Location | Higher premiums in high-crime or flood-prone areas |
| Property type | Flats tend to be cheaper than detached houses |
| Tenant profile | Students or DSS tenants may attract higher premiums |
| Length of tenancy | Short lets (e.g., Airbnb) are riskier and costlier |
| Claims history | Previous claims will push up costs |
| Security measures | Burglar alarms and deadlocks can reduce your premium |
Is Landlord Insurance a Legal Requirement?
In short: no, but…
- If you have a buy-to-let mortgage, your lender will almost certainly require building insurance at a minimum.
- Without it, you may be in breach of your loan agreement.
Even if you own the property outright, opting out of landlord insurance is a false economy—one incident could wipe out years of profit.
Tax Relief: Can You Claim It?
Yes. According to HMRC guidelines, landlord insurance premiums are considered an allowable expense. This means you can deduct the cost from your rental income before calculating tax—reducing your overall tax bill.
Tip: Keep all policy documents and renewal receipts for your records when submitting your annual Self Assessment.
Encourage Tenants to Get Renters Insurance
While landlord insurance protects your property and liability, it doesn’t protect your tenants’ belongings.
Encouraging (or even requiring) tenants to get contents insurance can reduce disputes and ensure tenants aren’t left out of pocket after a fire, flood, or burglary.
Choosing the Right Landlord Insurance Policy
Here’s how to make sure you're properly covered:
- Evaluate the risks specific to your property type and location.
- Decide on necessary add-ons, such as tenant default or accidental damage cover.
- Compare quotes using comparison websites
- Read the policy documents carefully—look for limits, exclusions, and claim procedures.
- Consider bundling multiple properties under one policy if you’re building a portfolio—it’s often cheaper per property.
For high quality landlord insurance, consider AXA Landlord Insurance.
Final Word: A Smart Safety Net
If you’re serious about renting out property, landlord insurance isn’t just a nice-to-have—it’s a smart, strategic decision. One burst pipe, legal claim, or missed rent payment can undo years of rental income. For first-time landlords especially, insurance provides peace of mind while you focus on managing your property.
When done right, being a landlord can be profitable, but protecting that investment is non-negotiable. Make sure your insurance is fit for purpose—and not just the cheapest quote you can find.
