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Buy to Let Insurance

Key information you need to know about Buy to Let Insurance for landlords.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 14, 2022

Investing in buy-to-let property proves lucrative for some but it’s important to be aware of the risks involved and safeguard yourself against them. This is where buy to let insurance cover comes in, and if you want to find out more about it, you’ve come to the right place.

This article provides everything you need to know about BTL (Buy to let) insurance in the UK and the types of cover that are available to UK landlords.

What insurance do landlords need?

Many landlords choose to take out buy-to-let insurance (also known as landlord insurance) to safeguard themselves against the risks associated with renting out a property.

Standard home insurance will not cover you against things like tenants failing to keep up with the rent, but landlord insurance policies offer broader protection and can be combined with other types of insurance, such as building insurance.

Having landlord insurance is not a legal requirement for buy to let property owners in the UK.

What about talking about content and buildings insurance and talking about these in a bit more detail?

What is buy to let insurance?

Buy-to-let mortgage insurance (also known as landlord insurance) is a type of policy geared towards landlords in the buy-to-let sector. It’s specifically designed to protect them against the risks associated with renting out a building, such as tenants failing to keep up with the rent, or damaging the property.

These policies are buy-to-let specific and differ from general home insurance, which would not suffice for a landlord renting out their property (unless they live in the property and tenants meet the lodger definitions).

Do I need buy to let insurance?

If you’re a landlord in the buy-to-let sector or have aspirations to become one, the answer is likely that you should consider it. Although having landlord insurance is not a legal requirement in the UK, a standard home insurance policy will only cover the building you own. It will not protect you against the specific risks associated with renting to a third party.

It’s also important to note that most mortgage lenders will make it a part of the terms and conditions of the mortgage for all owners and landlords to have full buildings cover.

Is buy to let insurance the same as landlords’ insurance?

Yes! The two terms can be used interchangeably and both describe the same type of policy.

If you’re seeking the best buy-to-let landlord insurance deals, get in touch. The whole-of-market advisors we work with can carry out an insurance comparison and connect you with the provider offering the right deals for landlords in your circumstances.

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What does buy to let insurance cover?

Buy-to-let insurance policies in the UK typically include…

  • Property owners’ liability
  • Buildings insurance
  • Alternative accommodation
  • Loss of rent
  • Optional extras

The above can often be taken as standalone buy-to-let property insurance plans, or as combined plans tailored to fit the borrower’s needs.

Property owners’ liability

If a third party – whether that’s one of your tenants or anyone else who has entered the property for whatever reason – suffers an injury on the premises or their personal possessions sustain damage there, you could be liable to pay compensation.

Property owners’ liability is often included in landlord insurance plans for this very reason as it can cover these compensation costs up to the lender’s indemnity limit. Most lenders impose a limit of £1-5 million but some may go higher in the right circumstances.

Buy to let buildings insurance

Buildings insurance is important for buy to let properties as it offers cover for your permanent fixtures and fittings, as well as total damage from flood /fire/subsidence etc and covers basically everything bar the contents.

A good policy should include the property’s ceiling, floors, walls, roof, windows and doors as well as outdoor features like as fences and garages. Fitted bathroom suites and kitchens are usually covered too, along with drains, pipes, tanks and cables.

Calculating how much to insure for can be the most challenging part of buy-to-let buildings insurance, as you’re insuring for the rebuild value of the property, rather than its purchase price. Overestimating means paying a higher premium, while underestimating and taking out cheap insurance might not cover the cost of repairs.

Beware of underinsurance

The implications of being underinsured can be severe. If the property was demolished and the rebuild cost was to cost, £200,000, with insurance cover for £150,000, they won’t pay out the full £150,000.

As you were paying for only 75% of the cover required, most insurers will only pay out 75% of the cover you were protected for, and thus could cap the payout at £112,500.

If you’re unsure how much to insure for, make an enquiry and the expert advisors we work with will help you calculate your property’s rebuild value, carry out a comparison of buy to let buildings insurance quotes and connect you with the lender offering the best deals.

Alternative accommodation protection for landlords

If your property was to be rendered unliveable for a limited time – due to fire damage, for example – it’s your responsibility to arrange alternative accommodation for your tenants.

This type of cover will foot the cost of the temporary accommodation while the repair work is carried out, though most lenders will place a cap on claims of this nature – around 20% of the total sum insured is standard, but some will go higher.

Loss of rent protection for landlords

Many buy-to-let property insurance plans will have you covered in the event of your rental income drying up as a result of the home being rendered uninhabitable. Most providers will reimburse a percentage of the rental income you would have received. Around 20% is standard, although some lenders will consider more.

Optional extras

Many insurers will offer the following as optional extras and can add them to policies as combined plans for borrowers seeking broader cover.

  • Contents insurance for buy-to-let properties
  • Accidental damage cover
  • Theft and malicious damage cover

Contents insurance

Contents insurance is aimed at landlords with furnished properties, as contents, in this case, refers to household items such as sofas, lamps and TVs that have been provided for the tenants. Essentially, anything that isn’t bolted down can fall into this category, although some lenders will extend it to carpets and flooring, as well as garden items.

Other providers will even extend to objects that can be taken outside of the property, such as bicycles, computers and jewellery if they are housed at the premises.

Contents insurance will protect these items from fire, theft and other issues, but keep in mind that accidental damage may only be included as an additional extra.

Many house insurance policies for buy-to-let properties will replace a damaged or stolen item with a brand new version of it, but others, known as indemnity policies, will offer less cover based on wear and tear.

Often, buy-to-let home insurance providers will offer buy-to-let buildings insurance quotes with contents insurance lumped in as a package deal.

Accidental damage cover on buy to let property

Accidental damage cover can be added to a house insurance policy for a buy-to-let property to protect the home (and its contents if taking contents insurance) in the event of an unexpected accident or incident. For example, a tenant may have spilt a glass of red wine on that new Persian rug you laid down. With accidental damage cover, you can claim for the cost of replacing the rug.

There are several things accidental damage cover often won’t protect you against, like damage caused by pets, bad workmanship or general wear and tear, but outside accidents such as a football crashing through the window are covered by many policies.

Theft and malicious damage cover on buy to let property

When taking out house insurance for a buy-to-let property, it’s worth considering whether you’re covered for the worst-case scenario. No landlord likes to think about the possibility of a tenant intentionally vandalising their property or stealing its contents, but with theft and malicious damage cover, you will be reimbursed for the cost of replacing or repairing the items in question.

If you’re seeking further landlord insurance advice and wondering about buy-to-let insurance costs, make an enquiry and the buy to let brokers we work with will assess your application and connect you with the insurance provider offering the best deals for somebody in your circumstances.

Can I get landlord insurance for an unoccupied property?

Yes, although in most cases lenders will only offer a short-term insurance deal for an empty buy to let property to tide you over until it’s occupied. Some will offer full cover for up to 30 days on an unoccupied property before switching to restricted cover after that. Others stretch to 60 days, but a number of lenders cease protection entirely after the initial period.

Unoccupied home insurance can safeguard your empty property against storm, flood and fire damage as well as theft, although many insurers place restrictions on how much they’re willing to pay out on these occurrences, and some won’t protect against them at all.

The cost of the cover will depend on the following factors…

  • The value of the empty property you wish to ensure
  • The location of the unoccupied property
  • The terms of the insurance plan
  • Security at the home
  • The reason the building is empty

If you’re trawling through buy-to-let home insurance quotes but are unsure what kind of cover is needed for your empty property, get in touch and the advisors we work with will offer expert insight, carry out a BTL house insurance comparison and connect you with the right lender.

How much does landlord insurance cost?

It can cost between £100 and £1,000 per year, with larger and more risky properties/tenant types perhaps even more than this. Your chances of landing a cheap landlord insurance deal depend on a number of variables which affect your basic premium, and they are…

  • The building type: The bigger the property, the more expensive your premium is likely to be you’re your property is unconventional in any way (a listed building or a property with a flat roof, for instance) it may be costlier to insure, or can require a specialist lender.
  • Your postcode: Some providers will base their premiums partly on the property’s postcode. If you live in an area with a high crime or claim rate, you may be expected to pay more.
  • The extras you take: We’ve already touched on extras, such as accidental damage and contents cover. Adding multiple extras can obviously bump up the price of your package.
  • Your insurance history: If you’ve had an insurance claim rejected or have been refused property insurance for a buy to let property, the lender may charge a higher premium.

If you’re unsure how much you should be paying for buy-to-let property insurance in the UK, make an enquiry and the advisors we work with will assess your application and connect you with the provider offering the best buy to let house insurance deals for someone in your circumstances.

Portfolio buy to let Insurance

If you’re a landlord with multiple properties on your books, portfolio insurance might be the most cost-effective (and often most simple) way to protect them all.

With portfolio insurance, you can arrange buildings and contents cover across all of your addresses in one fell swoop. Not only can this be more economical, you don’t have to go through the rigmarole of chasing up quotes for each individual property, which for larger portfolios can be a few times a month!

If you have more than one property and think portfolio insurance might be the best bet for you, get in touch and the specialist advisors we work with will help you find the lender offering the right deal for someone in your situation.

Landlord insurance for HMOs

If the property you’re seeking to insure is classed as a house in multiple occupation (HMO), there’s a good chance you will need to find a provider who specialises in this niche category.

With HMO insurance, premiums tend to be higher as having multiple tenants under one roof will be considered higher risk than assured shorthold tenancies (ASTs) by some mainstream insurers.

If you rent out rooms in your property to three or more people from different households, this is considered an HMO and may, therefore, require a license from the local authority. Failure to register the address as an HMO could jeopardise your insurance cover.

Furthermore, if you have taken in tenants at a house you own and are also living in, you’re property may have become an HMO without you even realising it, and therefore your standard home insurance cover needs updating to a bespoke policy for HMO landlords.

Buy to let insurance for non-standard properties

Insuring a conventional buy-to-let property such as a semi-detached house made from bricks and mortar is generally more straightforward than for a non-standard property as these are seen as higher risk by some insurers and a number of them will be reluctant to offer cover.

Non-standard properties include…

  • Holiday rentals
  • Thatched properties and high net-worth homes
  • Unoccupied properties
  • Non-standard construction
  • Non-standard use, such as running a business
  • Properties affected by subsidence, landslip, heave or flood damage

If you’re seeking insurance protection for one of the above, the good news is that there are niche providers out there who specialise in these properties, although some charge higher premiums due to the perceived higher risk and potential complications involved.

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Buy to let rental void protection

A void period is a length of time when a landlord’s rental property is between tenants. These can seriously impact on your annual profits as outgoings such as utility bills and council tax is still applicable, even when a property is empty.

Rent void protection is a product offered by a number of letting agents which helps landlords recoup some of their rental losses while their property is unoccupied. These plans will usually only payout for a limited period – around two months is standard, but some providers are more flexible – and will cover only a percentage of the sum you would receive in rent if the property had tenants in – around 75% on average, though some agents may go higher.

Who offers the best landlord insurance?

Insurance companies are like mortgage lenders, they are all different and offer many different products.

Insurance cost comparison websites will give you a good indication of what is available, but it can be somewhat overwhelming when it comes to what you’re actually paying for.

While cost is a consideration, making sure that you get the cover you need is essential. The last thing you want is to find your insurance falls far short of the claim.

Landlord insurance comparison table

We’ve put together the table below (correct at the time of writing) to give you a rough idea of what type of coverage the UK’s leading landlord insurance providers offer…

Provider Maximum Cover Offered Number of Properties Covered Contents Included?
AXA Up to £10 million Up to 10 Optional extra
Aviva No upper limit stated Up to 3 Yes
Lloyds No upper limit stated Up to 5 Optional extra
Churchill Up to £10 million No upper limit stated Yes
Zurich £5 million per property Up to 10 Optional extra
Direct Line No upper limit stated Up to 15 Yes
Allianz No upper limit stated Up to 20 Yes
Halifax No upper limit stated Up to 5 Yes

Last updated November 2019.

Keep in mind that this table is merely for example purposes. The market is vast and there are many other providers out there. What’s more rates and deals can change at any time and the information above is subject to change.

Is there a better alternative to buy to let insurance comparison sites?

Yes! The key is to have a comprehensive understanding of what you need and then compare it to what the insurance will actually cover. Plus it’s also important to have access to the entire market.

The best option is to talk to one of the whole-of-market advisors we work with for the right advice on insurance. They should be able to match you to the right provider and make sure you have the right cover at the right price.

Make an enquiry to get started!

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

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Life insurance for buy to let landlords

Buy-to-let landlords occasionally ask us whether life insurance is a necessity for them, and in many cases, it is advisable to have a life insurance policy in place. That way,  your mortgage debt can be repaid with the payout if you die. This can provide financial security and peace of mind to your loved ones as they will inherit debt-free properties whilst continuing to generate income from them.

Here’s the problem though: investors with multiple buy-to-let mortgages tend to need a hefty amount of life cover, so the premium quotes can shoot through the roof. Moreover, life insurance premiums are not tax-deductible against rental income or capital gains.

Tax-deductible life insurance for Ltd Companies

The above is bad news for private landlords – i.e. those who own their properties in their personal names – but those who have a company could secure tax breaks by taking out what’s known as a Relevant Life Policy in the business’ name.

This type of life insurance allows the borrower to pay the premiums via their company, claiming tax breaks on them, while the proceeds can be paid to the nominated beneficiaries debt-free at the end of the customer’s life.

Landlords with larger property portfolios may find that it isn’t possible to find life insurance cover that will fully settle the combined outstanding debt, in which case the best course of action may be to sell off some of the properties and have the family inherit the rest.

If you’re unsure what kind of landlord life insurance you need, make an enquiry and the advisors we work with will offer their insight and connect you with an insurance provider who specialises in customers in your situation.

Do I pay national insurance if I’m a buy to let landlord?

Quite possibly. Anyone who is renting out a property may be required to pay tax.

HMRC state that Class 2 National Insurance is payable if your rental income profits exceed £5,965 a year and what you do is classed as running a business. So, if being a landlord is your main job, you rent out more than one property or are buying new properties to let out, this is likely to apply.

The first £1,000 of your rental income is tax-free, and if your profits are less than £5,965 per year, you can make voluntary Class 2 National Insurance payments. Consult the HMRC’s website for more information on this.

Speak to a landlord insurance expert

If you like anything in this article or you’d like to know more, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Then sit back and let us do all the hard work in finding the landlord insurance advisor with the right expertise for your circumstances. The experts we work with have access to the whole of the UK market, so whether you’re seeking, buy to let insurance in Northern Ireland, England, Scotland or Wales, they will search for the right deals for you.

We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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