25 April 2022

What you need to know about the average cost of landlord insurance

By Kevin Meek New Business Senior Account Handler

As a landlord, your rental property will always be a top financial priority – not only is it a source of income, but it represents a long term investment that you need to protect. So what do you do if something goes wrong? From burst pipes to interrupted rent payments to tenants accidentally injuring themselves, if something happens with your rental property you’ll need the right kind of insurance to keep you covered.

Luckily, there are plenty of options for landlord insurance available for single and multiple rental properties – but what does it cover and how much does landlord insurance cost? Read on for your complete guide.

Firstly, what is landlord insurance?

A landlord insurance policy is specially designed to cover properties that are being rented out. It’s different to home insurance in that it covers risks you only get when you let, such as loss of rent and property owners’ liability, but it also covers buildings and contents as well as things like accidental damage.

While it’s not a technically a legal requirement, it’s highly recommended that every landlord has it – simply because standard home insurance rarely covers a rental property. In fact, you may even find your insurer refuses to pay out for a claim if you’ve been letting a property out under a standard home policy. If you used a buy-to-let mortgage to purchase your property and it’s not yet paid off, in this instance the lender will require you to have landlord insurance when letting the property to a tenant.

So rather than risk gaps in your cover, you can take out a landlord insurance policy that’s specially designed to cover the unique risks that come with rentals – and offers correct protection for the property you’ve invested in.

What does landlord insurance cover?

Landlord insurance typically includes cover for your buildings, and it can be combined with a contents policy as well to cover any fixtures, fittings and furniture. As a rule, your policy should offer the following types of cover:

  • Buildings insurance – to protect your property structure from risks such as fire and floods
  • Contents insurance – to cover the contents within your let, such as furniture and appliances.
  • Alternative accommodation – cover for the costs of providing alternative accommodation if your property becomes uninhabitable
  • Property owners’ liability – this protects landlords against claims for accidents or injuries that happen in your property
  • Accidental damage cover – often included as standard to protect your property
  • Malicious damage – keeping you safe from deliberate damage by your tenants
  • Extended periods of unoccupancy – in the event your property stands empty for longer than anticipated, this gives you the right level of cover
  • Legal expenses – if you need to take a dispute to court or fight a claim against you.

With over 2.65 million landlords in the UK, there’s a vast variation in the type of cover each landlord needs – so you can often pick and choose your coverage depending on your property. You can also add other extras too, such as Home Emergency Cover, which kicks in if there’s an urgent problem with your property like a broken boiler or burst pipes.

So how much does landlord insurance cost on average?

The average cost of landlord insurance varies depending on your property type and tenants – and your provider. And as no two landlords are ever the same, it’s hard to name a figure without taking into account your specific circumstances.

However, as a rough guide, research by some of the popular comparison websites out there suggest that the average cost ranges from £120 to £170 for basic buildings cover – with some policies coming in at over £200. This is loosely based on a rebuild value of £200,000, which is the average price to rebuild a house in the UK.

However, there are many factors to take into consideration and before you head straight for the cheapest quote, it’s important to weigh up the level of cover you’ll need for your particular property or portfolio.

What factors will influence my quote?

How much it would cost to rebuild your rental property in the event of a total loss, for example after a fire, is one of the main factors that influences how much you’ll pay for your landlord insurance. It follows that the higher the rebuild cost, the higher your premium is likely to be.

Your claims history, as well as the age and history of the property, will all be taken into consideration too. For example, if the property you’re letting is listed, then you’ll need a higher level of buildings cover than a standard built modern property.

However, there’s also a range of more specific factors that will have an impact on your landlord insurance quotes, which are worth bearing in mind when you look for cover. These include:

  • The type of occupancy –is your rental used for commercial, residential or mixed purposes?
  • The type of tenants – such as employed, student, house shares, housing associations, Local Authorities, or more – some types of tenants might have lower or higher premiums depending on their perceived risk
  • The type of building – for example is it purpose built, an apartment, a listed property, etc?
  • The type of materials your property is made from – for example, your sum insured for non-standard construction such as timber frame or thatched properties may be higher
  • The number of properties you want to cover
  • If there are any building or renovation works in progress
  • If your property is occupied or unoccupied
  • Where your property is located
  • The number of tenants – for example will there be multiple adults living in your rental as an HMO or are you letting to a single professional?
  • The level of contents you’re insuring – this can vary if your rental is provided furnished or unfurnished
  • The level of excess you choose
  • Any coverages you want to add on – such as cover for fixtures and fittings, tenant default, rental protection or home emergency cover
  • If you’re a member of a landlord accreditation scheme – this may entitle you to a discount from some insurers.

So, as you can see, there’s a whole variety of factors that an insurer will take into consideration when offering a landlord insurance quote. So rather than basing your decision on price alone, you should think about getting the policy that will give you the maximum peace of mind – and this means shopping around to compare quotes and coverage to make sure you won’t end up caught out in the event you need to claim.

Do I really need to buy landlord insurance?

If you have a buy-to-let mortgage on your property, the simple answer is yes! If you mortgage provider hasn’t supplied you with landlord insurance, there is likely to be an obligation for you to purchase this within your mortgage terms and conditions. Outside of buy-to-let mortgages, technically, landlord insurance isn’t a legal requirement, but not protecting your let could be a risky business, especially if you’re relying on it for income. What would you do if your tenants fall into arrears, or if anyone has an accident in your property and you have to pay compensation? You’d have to fund the costs yourself, and they can get pretty high pretty quickly.

You should also bear in mind that most general home insurance policies won’t cover your rental property, as the risks are seen as different. For example, tenants may not look after a property they rent to the same standard as the owner of a property, which could mean maintenance issues developing or careless damage which isn’t fixed quickly.

What’s more, you as the landlord could be held liable if your tenant hurts themselves on your property. In this kind of situation, you could end up being sued for compensation, or in an expensive legal battle, which landlord insurance can cover – unlike a standard home policy.

So while this means your landlord insurance cost may be higher than ordinary home insurance, it’s worth every penny – offering relevant cover that’s specially designed to protect you from the risks that come with letting a property.

What happens if I have more than one property?

Many landlords build up a property portfolio and this shouldn’t be a problem as far as landlord insurance goes. You can either cover each one individually with tailored landlord insurance policies for each property, or you can put them all onto a dedicated policy for multiple properties. There are pros and cons to each approach, so it’s worth a discussion with your broker.

If you take out multiple individual policies with one insurer, you may be able to get a discount – although this won’t apply if you take out cover with different providers.

A multi-property landlord insurance policy saves you admin time and stress – as all your properties will be on the one policy with one renewal date. They can also work out cheaper for the same reason. However, it can be a complex policy to write so it’s best to find a broker who specialises in multi-property landlords, like Protect My Let, who have the experience and contacts to find you the best deal they can from the right providers.

So how do you find the landlord insurance policy that’s right for you?

Golden rules for finding the right landlord policy

Don’t judge on price alone

This is one of the most important rules when finding the right insurance policy for any part of your life, left alone your rental property. Cheap landlord insurance may seem attractive but it always pays to double-check what cover is actually on offer.

For example, it might be cheaper because some of the covers that come as standard on other more expensive policies isn’t included – which could cause issues down the line in the event of a claim. Or it could mean that the insurance is backed by a lower rated underwriter, which may mean it’s harder to successfully claim.

On the other side of the equation, many off-the-shelf landlord policies may include covers that aren’t relevant to your particular rental – so you could end up paying for pointless extras that you don’t need. That’s why it’s always worth your while to talk to a broker who will be better placed to tailor your cover to your property.

Beware online quotes

It’s always tempting to head online and pick the first policy you see on a price comparison site – it seems so much simpler. But this could end up costing you down the line. Firstly, online providers cannot advise or tailor policies to your needs – and they won’t be able to provide quotes for non-standard rental properties either, which could limit you.

Secondly, these type of cheaper insurance quotes generally come at a price. To offer the lower premium, the provider most likely pays a large premium upfront and charges you a lower rate to secure your business, only to increase the price at your next renewal to recoup the costs. This means, while it looks like you’re getting a good deal on your landlord insurance cost, it may not prove to be so in the long run. That’s where a broker comes in.

Talk to a broker

We touched on this above – but talking to an insurance broker is often the best way you’ll find a landlord insurance policy that’s right for your needs.

A good broker understands the rental market and can advise you on the cover that’s most appropriate for your rental. By talking to a real person, you’ll be able to drill down into the specifics of the cover so you can be sure you’re getting protection that you really need. For example, do you need just buildings insurance? Do you need full contents insurance or only cover for fixtures and fittings? This means they’ll be able to search the market for a landlord policy that fits your needs.

A longstanding broker often has good relationships with insurance companies, which means they can negotiate discounts on your behalf that you wouldn’t be able to access if you contacted them directly. And, when it comes to renewal, you’ll have the support of a broker who can track the rates of different insurers – able to advise when they go down in price and reviewing a panel of providers for a better deal in the face of any unexpected price increases.  This usually means a steady and reliable rate in terms of landlord insurance cost.

Compare quotes

A good broker will be able to compare policies for you and offer the best deal for you, but it’s always worthwhile shopping around different providers to get a good feel for prices and cover levels. It’s also a good idea to check reviews for different brokers and providers – you can be more sure of good service from providers with a high independent rating.

Tips for keeping your costs down

With all things considered, there are certain steps you can take to help keep the cost of your landlord insurance down. Adopting some of the following approaches could make a difference when it’s time to take out your cover:

  • Keep your property in good condition to help avoid situations occurring where you may have to claim, which in turn could impact your premium – for example, keep essentials like the central heating, gutters and drainage well maintained
  • Add security measures to your property, like a burglar alarm or CCTV, and make sure windows and doors have high-quality assured locks
  • Try to avoid leaving your property unoccupied as this is when it’s at a higher risk of theft and vandalism
  • Make sure you have the right amount of cover and you’re not paying extra for covers you don’t need – for example do you just need buildings insurance or contents as well?
  • Pay an annual premium instead of paying monthly to avoid extra interest chargers
  • Consider how much excess to set on your policy – a higher excess can lead to a lower premium
  • Weigh up whether it’s worth making claims for smaller issues, as multiple small claims could cost you more in the long-run
  • Think about tenant referencing as a form of risk management – this is when you get to know your tenants so you can advise your insurer about the people living there. This could help you save money.

At the end of the day, landlord insurance is a necessary purchase but it doesn’t have to cost the earth. And with the support of an experienced broker like us, you can get landlord cover that’s just what you need, not what you don’t – at a price that works for you.

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Need to speak to someone about landlord insurance?

You can find further useful information, get in touch with a member of our team, or submit an enquiry on our landlord insurance page.



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