It is strongly advised that landlords arrange landlord insurance on the property that they are letting.
The tenant is responsible for their own possessions and shouldn’t rely on a landlord’s policy to cover their possessions.
Too often do we hear Landlords say that they have “already taken out buildings and contents insurance” without realising that homeowners insurance is not the right type of insurance for a Tenanted property and in most cases, they would not be covered by the insurers.
Before we explain the somewhat subtle differences in these two types of property insurance, the most important point to stress is that you are unlikely to be covered if you are renting out your property without specialist Landlords insurance.
Insurance companies have taken the stand that generally speaking, a Tenant is less inclined to maintain the property to the standard of the owner and therefore, the risk associated to insuring a Tenanted property is higher.
Equally, as with the nature of letting a property, sometimes you will experience void periods (where the property is vacant in between lets). Landlords’ insurance should cover unoccupied property for a longer period than homeowners’ insurance.
Another key difference is that malicious damage caused by the Tenant, as well as guests of the Tenant, should be covered by specialist Landlords insurance, unlike homeowners.
The main difference between your own home insurance and Landlords insurance is the added legal liability insurance. This helps to protect the Landlord against any claims made for example, if an electrical fault causes damage to the property or a person residing in the property.
It is important that Landlords are covered for Public Liability because if the Landlord is successfully sued it could cost the loss of earnings for the life of the litigant – this can be a Tenant or it could be a visitor like a Doctor or other professional and in this case the loss of earning may amount to several £m.