What’s the difference between home insurance and landlord insurance?
If you’ve just become a landlord and are confused why you need landlord insurance rather than home insurance, here’s why.
Do I need Landlord Insurance?
It’s a different kind of risk when you don’t live in the property. To start with, it’s more difficult for the owner to maintain the property. You’re not there to keep an eye on it and as a landlord you have limited access so you can’t just pop in and check on the place whenever you want.
This means the owner has limited sight of any potential issues, such as damp problems or frayed carpets. So to a large extent, they’ll be relying on the tenants to let them know if anything needs to be sorted. Plus, tenants are less likely to be as concerned about the general upkeep of the property as the owner.
As such, most home insurance policies aren’t made to suit a tenancy. So if you start renting out a property that you were previously living in, your insurer will want you to have landlord insurance rather than home insurance. In the same instance, a mortgage provider would also insist that you tell them so they can amend your mortgage to suit the new use.
Here’s how landlord insurance differs from home insurance and how it covers your landlord risk:
Landlord Insurance compared to Home Insurance
Public Liability Insurance:
You may notice your home insurance has public liability cover on it, but that would only cover domestic usage of the property, such as postman tripping on a wonky step when delivering the post. However, generally home insurance doesn’t cover your legal liabilities for your business if you’re renting the property.
When you’re running a business, such as renting a property out, you have a duty of care to your tenants. So if your tenant trips on uneven tiles, and then injures themselves, you need the right type of public liability insurance to cover you if they make a claim against you.
Find out more about public liability for landlords.
Home insurance covers you and your family if you couldn’t stay in the property due to an insured event, like a flood. It only covers the owner/occupier. You’d need Landlord insurance to cover your tenants in this situation.
Loss of rent:
This replaces lost rent if your property becomes uninhabitable due to an insured event such as a fire. There is no equivalent on a home insurance policy. Find out more about loss of rent.
Home insurance may cover you for malicious damage in case of vandalism or even a riot. With landlord insurance you can get insurance that covers you for your tenants causing wilful damage, such as stealing pipe work or setting up cannabis farms.
Home insurance may cover you in situations in which you as a homeowner need to take legal action, such as a tradesman having carried out faulty work. However, it wouldn’t cover you for a legal situation due to your activities as a landlord, as you’re running your property as a business. So if you need to take a tenant to court who hasn’t paid their rent, home insurance won’t cover you.