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Buy To Let Insurance

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 12, 2022

Buy to let insurance and landlord insurance for your properties

While investing in property is lucrative, it is essential to be aware and protect yourself from the potential risks. You can find more information about buy-to-let insurance here.

This article will cover everything you need about BTL (Buy to Let) insurance in the UK and the different types of coverage available for landlords in the UK. The landlord insurance cover, also known as property owners liability insurance, is critical when you own rental property.

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What type of insurance does a landlord need?

To protect themselves from the risks of renting out their property, many landlords purchase buy-to-let insurance (also known as landlord insurance).

Standard home insurance won’t cover you for things like tenants not paying rent on time. However, landlord insurance policies provide excellent protection and can be combined with other types of insurance, such as building insurance.

The UK does not require landlord insurance for property owners who buy to let.

How about we talk about content and building insurance?

What is buy-to-let insurance?

Buy-to-let mortgage insurance, also known as landlord insurance, is a policy that targets landlords in the buy-to-let sector. It is specifically designed to protect landlords against the risks of renting out buildings, such as tenants not paying rent on time or damaging the property.

These policies are specific to buy-to-let and do not replace general home insurance. A landlord renting a property would need this policy unless the tenants live there and meet the lodger requirements.

What do I need to do to get insurance for my letting?

You may be a landlord in the buy-to-let sector or aspire to be one. While landlord insurance is not required in the UK, a standard homeowner insurance policy will only protect the property you own. This policy will not cover you for the risks of renting out your property to someone else.

Important to note is that many mortgage lenders will require landlords and owners to have complete building coverage as part of their mortgage terms and conditions.

Is buy-to-let insurance the same thing as landlords’ insurance

Yes! Both terms can be interchanged and refer to the same type of policy.

Get in touch if you are looking for the best buy-to-landlord insurance deals. We can help you find the best deal for your situation by connecting you with whole-of-market advisers.

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What is the coverage of buy-to-let insurance?

The UK’s buy-to-let policies typically include:

  • Liability of property owners
  • Insurance for buildings
  • Other accommodation
  • Loss of Rent
  • Additional options

These plans can be used as separate buy-to-let home insurance or combined plans tailored to the borrower’s specific needs.

Liability of property owners

You could be held responsible for any injury or damage to property or personal belongings sustained by a third party, whether it’s one of your tenants or someone else who enters the property for any reason.

Landlord insurance policy plans often include property owners’ liability. This is because it can pay compensation costs up to the lender’s indemnity limit. While most lenders have a £1-5,000,000 limit, some may go higher depending on the circumstances.

Insurance for buildings to be rented

Buy-to-let properties need building insurance. It covers permanent fixtures, fittings, damage from fire/subsidence, flood/fire, etc. and everything except the contents.

A good insurance should cover the property’s roof, ceilings, floors, walls and roofs, and any outdoor features such as fences or garages. Kitchens and bathrooms with fitted cabinets are covered, as well as drains, pipes and tanks.

The most challenging part of buying to-let buildings insurance is calculating how much you should insure. You are insuring the property’s rebuild value, not its purchase price. Underestimating can result in higher premiums, but underestimating could lead to lower insurance costs.

Underinsurance is a severe problem.

Being underinsured can have serious consequences. They won’t pay the full £150,000 if the property is demolished, and the rebuilding costs would be £200,000.

Because you paid only 75% for the coverage required, most insurance companies will only pay 75%. This could limit the payout to £112,500.

If you are unsure how much insurance you need, send an enquiry.

Our expert advisors will help you calculate your property’s rebuild value, compare buy-to-let buildings insurance quotes, and connect you to the best lender.

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Alternative accommodation protection for landlords

You are responsible for finding alternative accommodation for your tenants if your property becomes unlivable for a short time, such as due to fire damage.

This coverage will cover the cost of temporary accommodation while repairs are made. However, most lenders will limit such claims – usually around 20% of the total insured sum, but some lenders will allow higher limitations.

Landlords are at risk of losing their rent protection

You can get insurance to cover the loss of rental income due to uninhabitable property. Many providers will reimburse you a portion of your rental income. Typically, this is around 20%. However, some lenders will allow for more.

Additional options

Many insurers offer these optional extras. They can be added to policies or combined plans for those who need more coverage.

  • Buy-to-let property contents insurance
  • Accidental damage cover
  • Protection against theft and malicious damage

Contents insurance

Contents insurance is for landlords who have furnished properties. In this instance, contents refer to household objects such as TVs, couches, and lamps for tenants. This insurance covers anything not bolted down, but some lenders will also protect flooring and carpets.

Other providers may assist with items that cannot be taken from the property if they are located on the property.

The contents insurance will cover these items against fire, theft, and other issues. However, accidental damage may only be covered as an extra.

While many policies covering house insurance for buy-to-let properties will replace damaged or stolen items with new versions, indemnity policies will provide less coverage based on wear and tear.

Often, buy-to-let home insurance providers offer insurance quotes for buy-to-let buildings with contents insurance as part of a package deal.

Buy to Let Property – Accidental Damage Coverage

To protect your home and contents (if you have contents insurance), accidental damage coverage can be added to a housing policy in the unlikely event of an accident or other incident. A tenant might have spilt a glass of red wine onto the Persian rug you just laid. You can get accidental damage coverage to cover the cost of replacing your carpet.

Many policies cover accidental damage, although you won’t be covered for damage from pets or poor workmanship. However, coverages will protect you against outside events such as a football hitting through a window.

Buy to Let Property Insurance Covers for Theft and Malicious Damage

It is worth considering whether your house insurance covers you for the worst-case scenario when purchasing house insurance for a buy-to-let property. No landlord wants to consider the possibility of a tenant intentionally damaging or stealing from their property. However, theft and malicious damages coverage will reimburse you for the costs of replacing or repairing those items.

Enquire if you need additional landlord insurance policy advice or are curious about the cost of buy-to-let property insurance.

The brokers we work with will review your application and match you with the right insurance provider for your situation.

Can I get landlord coverage for an unoccupied house?

Yes. However, most lenders won’t offer short-term insurance for an empty property. This is to help you get through the time it takes to occupy. Some lenders will provide full coverage for up to 30 days on unoccupied properties before switching to a limited range. Some lenders extend protection to 60 days. However, many lenders end their coverage thoroughly after that initial period.

Although unoccupied home insurance is a way to protect your property from theft and storm damage, as well as fire and flood damage, many insurers have restrictions on the amount they will pay.

These factors will affect the cost of your cover.

  • The property’s value you want to protect
  • The exact location of the unoccupied property
  • The terms and conditions of the insurance plan
  • Home security
  • This is why the building is empty

Get in touch if you want buy-to-let insurance quotes but don’t know what type of coverage you need.

Our advisors will provide expert insight, perform a BTL insurance comparison, and connect you to the right lender.

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What is the cost of landlord insurance?

The insurance cost can range from £100 to £1,000 annually, with higher-risk properties/tenants possibly paying even more. Many factors can affect your chances of getting cheap landlord insurance.

  • The type of building: If your property is unusual (a listed property or a property with flat roofs, for example), it might be more costly to insure or require a specialist lender.
  • Your postal code: Premiums are based partly on the property’s postcode. You may have to pay more if you live in an area with a high crime rate or claims.
  • What extras are you taking? We’ve already mentioned extras like accidental damage and content coverage. Multiple extras can increase the cost of your package.
  • Your insurance record: The lender might charge a higher premium if you have had an insurance claim denied or refused property insurance for a property to rent.

Do you have any questions about the cost of buy-to-let UK property insurance? Send us an inquiry. Our advisors will review your application and match you with the best provider for your situation.

Portfolio Buy to Let Insurance

Portfolio insurance is a great way to protect multiple properties if you are a landlord.

Portfolio insurance allows you to arrange contents and building coverage across all your addresses in one go. This is not only more cost-effective, but it also eliminates the hassle of getting quotes for every property. For more extensive portfolios, this can take up to a few months.

Get in touch if you think portfolio insurance is the best option. Our specialist advisors will help you find the right lender for your situation.

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HMOs can be insured by landlords’

You will need to look for a specialist if the property you are looking to insure falls under the house-in-multiple occupation (HMO) category.

Premiums for HMO insurance tend to be more expensive because multiple tenants living under the same roof are considered riskier than assured shorthold Tenancies (ASTs). This is why some mainstream insurers charge higher premiums.

You may need a license from your local authority if you rent rooms to more than three people from different households in your home. You could lose your insurance coverage if you fail to register the address as an HMO.

You should also consider that taking in tenants in a house you own could be an HMO. Therefore, your home insurance policy must be updated to include HMO landlords.

Non-standard properties can be insured with buy-to-let insurance

It is usually easier to insure a traditional buy-to-let property, such as a semi-detached brick-and-mortar house than a nonstandard property. Some insurance companies consider these properties a higher risk, and many will not offer coverage.

These properties are not standard…

  • Holiday rentals
  • High net-worth homes and properties with a lot of settlers
  • Properties that are not occupied
  • Constructions that are not standard
  • Non-standard uses, such as the running of a business
  • Subsidence, flooding, landslip, or heave damage to properties

There are niche insurance providers that specialise in the above properties. However, premiums can be higher due to higher risks and potential complications.

Rent to Let void Protection

A void period is when tenants do not occupy a landlord’s rental properties. These can seriously impact your annual profits, as you will still be responsible for paying utility bills and council taxes even if the property is empty.

Several letting agents offer rent void protection, which is a product that helps landlords recover some of their rental losses when their property is vacant. These plans usually pay out for a short period – typically around two months, although some providers may be more flexible. They will only cover a portion of what you would get in rent if there were tenants present – approximately 75% on average, but some agents may go higher.

Which company offers the best landlord insurance?

Insurance companies are similar to mortgage lenders in that they offer many products and differ from each other.

Although insurance cost comparison websites can indicate the available options, it can sometimes be overwhelming to see what you are paying.

Although cost is essential, ensuring the right coverage is crucial. It is not a good idea to have insurance that does not cover your claim.

Are there better options for buying let insurance?

Yes! It is possible. Access to the whole market is also essential.

For the best insurance advice, it is best to speak to one of our whole-of-market advisers. They should be able to match you with the right provider and ensure you get the right coverage at the right price.

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Buy to Let Landlords Life Insurance

We are often asked by landlords who own a buy-to-let property whether they need life insurance. In many cases, it is recommended to have a policy for life insurance. This will allow you to repay your mortgage debt and receive the payout in the event of your death. This will provide financial security and peace of mind to your loved ones, as they can inherit debt-free property while still earning income.

The problem is that investors who have multiple buy-to-let loans will need to insure their lives. Premiums can soar. Life insurance premiums cannot be deducted from rental income or capital gains.

Ltd Companies: Tax-deductible life insurance

This is bad news for private landlords, i.e. Private landlords who own their property in their names may not be able to get tax breaks if they have a Relevant Life Policy.

This life insurance allows borrowers to pay premiums through their company and claim tax breaks. The proceeds can also be paid to nominated beneficiaries without any debt at the end.

Landlords who have more extensive property portfolios might find it difficult to find life insurance that covers all of their outstanding debts. In this case, the best option is to sell some properties and let the family inherit the remainder.

Enquire if you are unsure about the type of landlord life insurance you need. Our advisors will advise and help you find an insurance provider who can provide it.

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If I am a landlord who buys to let’s, do I have to pay national insurance?

It is possible. Tax may be due to anyone renting out a property.

HMRC states that Class 2 National Insurance is required if you earn more than £5,965 per year from rental income and your business activities are considered to be running a business. If you are a landlord and rent more than one property, or if you buy new properties to let out, then this insurance is likely to apply.

Tax-free: The first £1,000 of rental income is exempted from tax. If your annual profits exceed £5,965 per annum, you may make voluntary Class 2 National Insurance contributions. For more information, visit the HMRC website.

Talk to an expert on landlord insurance

You can call today to discuss any topic or submit an enquiry online.

Relax, and let us find the best landlord insurance advisor for you. Our experts have access to all of the UK markets to find the best deals for you, whether you are looking for buy-to-let insurance in Northern Ireland, England, Scotland, Wales, or both.

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