Do I need Landlord Insurance?
Yes! While insurance is certainly a complex topic, the answer in this case is simple: you need landlord insurance to protect you from the risks associated with having tenants living in your property. Being a landlord can be expensive and stressful but having the correct cover in place can give you security and peace of mind that your investment is protected.
What is landlord insurance?
Landlord insurance is a cover that protects landlords from risks associated with their rental properties. Unlike home insurance, landlord insurance can protect you from specific liabilities associated with your tenants, such as loss of rent and malicious or accidental damage and safeguard you against financial losses linked to your rented property. Landlord insurance can also protect you from legal liability, such as in the event of a tenant or visitor to your let property incurring injury, either by accident or owner negligence. Alternative accommodation for your tenant can also be covered by landlord insurance in the event of your property needing extensive repairs.
Landlord vs. Home Insurance
Landlord and home insurance policies do crossover and are similar in many ways, covering many of the same risks and both giving extensive coverage. However, while similar, they maintain some very important differences. Imagine that you are a taxi driver thinking about car insurance policies. While a taxi performs the same basic function as any other car, it also incurs a lot more use, and more use equals greater risk. You wouldn’t start using your car for “hire and reward” without letting your insurance provider know, would you? Of course not! If something happened to your passengers and you were not properly insured, you would be left personally liable for any costs arising. Owning a rental property, is similar to being a taxi driver, the risk is associated with how the car is being used or in the landlords case, the property.
If you trip and fall at home because of a loose piece of carpeting on your stairs, it’s an unfortunate accident; but if your tenant or their visitor falls in or on your property, it could become a claim. If you don’t have the correct cover, you will be personally responsible for all associated costs and expenses, from medical treatment to loss of earnings, and for any compensation awarded to the claimant if you are found at fault. Because at the end of the day, as a landlord, you are legally required to provide safe premises for your tenant.
There are two main covers on a landlord policy that you won’t get with a standard home policy:
- Buildings & Contents (Landlord) – This is the most comprehensive cover for your property and is advised if you are leasing a furnished house.
- Loss of Rent / Alternative – Loss of rent cover protects you and your income if your tenants have to move out after an insured event such as a flood or fire. Loss of rent cover can protect your loss of income and the additional costs of arranging alternative accommodation on your tenants’ behalf.
(It’s also important to note that if you have a rental property insured under a standard home insurance policy and you haven’t advised your insurer that the property is let out, this can cause issues with claims as this is a material fact for Insurers.)
As a landlord, what problems might I face?
Being a landlord can be an expensive business, and if you don’t have adequate cover in place, it could end up costing you a considerable amount to put things right if something goes wrong. Damage to the property or its contents, accidental or malicious, is one of the biggest risks for private landlords.
Serious damage can be caused by perils (hazards). A peril is an event such as a fire or a storm that causes damage or loss to your property. Generally, the perils included on your policy include:
- Riot – 12 people or more
- Civil commotion – any damage caused during politically motivated gatherings
- Malicious persons (anti-social behaviour)
- Subterranean fire – fire underground
- Storm – such as Ophelia
- Flood – rivers or coastal flooding (subject to geo-mapping)
- Escape of water – burst pipes, overflowing tanks, impact by road vehicle or animal
- Subsidence, ground heave or landslip**
- Theft or attempt of theft, or damage caused by the attempt of theft
- Escape of fuel oil – leaking oil tank or pipes
**Subject to exclusions. Insight’s Landlord insurance policy can provide subsidence cover in many cases.
Damage Caused by Tenants
Damage caused by tenants can also be an issue for landlords, as furniture, fittings and décor can be damaged during the course of a tenancy. Some of this damage would fall under general wear and tear from daily use and is not covered by landlord insurance. You can, however, as an Irish landlord, claim a capital allowance for this depreciation at a rate of 12.5% a year over 8 years (Wear & Tear Allowance). Under a landlord insurance policy, damage above normal wear and tear may be claimed for if considered the fault of the tenant. This includes damages such as:
- Damaged or broken furniture & fittings
- Damaged walls or door handles/locks
- Broken windows
- Ripped carpet/lino or damage to wooden floors
- Broken or damaged appliances
- Damaged plumbing/heating systems
- Burns or stains caused by smoking (in a non-smoking house)
- Damage caused by pets – chewing/urine stains
Sometimes this damage can be deliberate (malicious), but mostly, it’s unintentional. Many tenants will not deal with minor issues themselves–a loose press door, for example, that just requires a screw to be tightened on the hinge. Because it is not their property and they do not see it as their job, they might leave it as is, allowing the door to bang and swing. Over time, this causes irreparable damage to the hinge and door. The same issue can arise with small leaks or damp patches, which, left untended, can turn into very expensive repairs. As a landlord, unless you are inspecting your property weekly, you are relying on the tenant to keep you informed of possible issues. This doesn’t always happen, which is why having the extra protection of a landlord insurance policy can be very reassuring.
Quite often, landlord policies do not include cover for accidental damage. Fire & Perils cover is generally what is available in the market. At Insight Insurance, we can offer you All Risks Cover, including accidental damage and subsidence.
What is All Risks Cover?
All risks cover includes the above-listed perils, plus accidental damage. Accidental damage is the “whoops” moment. Your tenant is rushing everyone out the door for the school run, and one of the children, while brushing their teeth, leaves the tap in the bathroom running. No one is home until 6 pm that evening, by which time water has caused severe damage to walls, ceilings, floors and furniture. The house is flooded, but the flood peril does not cover this “whoops” moment on either a landlord or home policy (because, unlike a burst pipe, this water did not escape– someone let it out, as the tap was left on). So, unless you have a landlord policy with all risks cover, you could be facing a large repair bill.
All in all, it’s clear that as a landlord, having insurance specially tailored to your risks and needs is necessary. At Insight Insurance, we can offer you the most comprehensive landlord insurance possible to provide you with security and peace of mind that both you and your properties are protected.
Get a Quick Quote online now or call to speak to one of our dedicated team on 0818 911 009.