Is investment property risk free? house with umbrella 3D graphic

Property is Not a Risk Free Investment

Becoming a landlord has become one of the most popular methods of generating income, strengthening savings and investing for the future. However, our research revealed that one in five landlords don’t have the correct insurance.

By Jane Guaschi, Business Manager for Direct Line for Business in For Landlords.

house with umbrella 3D graphic

Over the past few years, being a landlord has fast become one of the most popular methods of generating income, strengthening savings and investing for the future.

However, recent research we’ve carried out has revealed a worrying one in five landlords don’t have the correct insurance, despite the fact that many home insurance policies won’t cover rental properties.

Recognising a rental property as a business as well as a home could help both landlord and tenant avoid disastrous consequences. Many standard home insurance policies don’t cover tenants, which could leave both the tenant and landlord at risk.

Landlord insurance covers incidents affecting (and indeed caused by) tenants, and often provides additional extras that aren’t on a standard home insurance policy. For example, it can include loss of rent cover if your property becomes uninhabitable due to an insured event, such as a fire or a flood.

A good landlord policy will also include public liability insurance (sometimes referred to as property owners’ liability insurance) as standard,. This is because you could be held legally liable for injuries sustained on your property or damage to neighbouring property.

Our research also found that landlords incur an average annual cost of £1,558 per property. Clearly running a property is an expensive endeavour and it’s vital to insure yourself against further unnecessary expense in the event of an accident.

Tenants should also make sure that their landlord is providing adequate insurance for both to themselves and the home that they live in. As a result, many will now ask to view proof that their landlord has specific insurance cover before signing a rental agreement.

It’s in a tenant’s best interests to check that there’s a suitable policy in place. If there’s an insured incident which means that the property is uninhabitable, suitable alternative accommodation should be available as quickly as possible. Good tenants, even those who pay less, are more profitable and less hassle in the long run, and demonstrating suitable insurance can help show that you run your properties professionally.

Direct Line for Business offers alternative accommodation cover and £2m of Public Liability cover as standard on our Landlord insurance. You can also select optional Accidental Damage cover to enhance Buildings and/or Contents cover you’ve chosen; and Loss of Rent cover for if your property becomes uninhabitable due to an insured event such as a flood or fire.

We will also guarantee to beat any like for like quote for new customers. *

New customers only. Cover on an equivalent basis to ours. Qualifying criteria apply. Terms & conditions apply.

Landlord Insurance Blog

Last Updated: 06 Aug 2015