Yahoo Finance The best landlord insurance providers 2024
There are currently an estimated 2.5 million landlords in Britain, drawn to property investment by the lure of regular rental income and the potential for capital growth as house prices grow.
However, while managing one or more properties can be an enjoyable way of making money for many landlords, it’s not without risk – problems with your property and challenging tenants can all see you end up with unexpected bills and take a sizeable chunk out of your return.
Despite this, two in five landlords (41.4pc) have not taken out specialist landlord insurance designed to protect them from the specific risks they face.
With lots of insurers offering different policies, with numerous optional extras, landlord insurance can be a tricky market to navigate. Here Telegraph Money explores how to narrow down the best landlord insurance provider for you.
What is landlord insurance?
Landlord insurance is a type of home insurance, specifically targeting the needs of landlords. Standard policies include buildings insurance to protect the structure of the property from damage from fire, flood or theft, but it’s possible to beef up your plan with extras.
This could include cover for loss of rent if your tenants don’t pay you as well as legal expenses if you have any disputes or need to take them to court.
The best landlord insurance providers 2024
The “best” policy for you will depend on a range of factors, including the price, coverage and provider’s service – and this will vary for everyone.
However, it’s worth looking at reviews to see how policies compare across these factors to see whether any particular providers stand out on the factors that matter most to you.
Experts at the consumer group Which? have analysed landlord insurance policies from across the market, assigning ratings to the cover they provide and asking landlords about their experiences with providers.
Its best provider was Alan Boswell Group, underwritten by Aviva. It achieved a top score of 84pc for its policy, while its customers rated it 74pc. It also scored between 80pc to 96pc for more specific coverage factors, including building, contents, liability and rent cover.
Direct Line was close behind, with an overall policy score of 80pc and a customer score of 65pc. Its other policy elements scored between 78pc to 85pc.
Alan Boswell Group also features in third place, but underwritten by NIG. It was given a policy score of 78pc, and a customer score of 74pc.
Analysis like this can provide a useful starting point to your research, but to get the best landlord insurance provider for you and your enterprise it’s important to give some consideration to the type of cover you need.
What type of cover is included in landlord insurance?
Landlord insurance is usually composed of multiple parts. Buildings insurance will usually be the core of your cover and will likely be a requirement of your lender if you have a mortgage. However, optional additional cover is available, letting you tailor your policy to your needs.
Buildings insurance: Covers the structure of your property as well as its permanent fixtures (such as a fitted kitchen or bathroom) from damage due to fire, flood or theft.
Contents insurance: Covers contents landlords provide for their tenants (not the tenant’s own belongings), for example furniture and appliances.
Accidental damage: Provides cover for damage to your property that’s the result of an accidental mishap, such as a smashed window or a tap that wasn’t turned off.
Liability insurance: This type of policy provides cover in case a tenant or tradesperson makes a claim against you, for example if they tripped on loose carpet.
Rent guarantee insurance: Provides cover for lost income if your tenants fall behind with their rent.
Legal expenses: Covers legal costs you may encounter as a landlord, for example contract disputes or taking a tenant to court.
What affects the cost of landlord insurance?
Figures from the Alan Boswell Group suggest that the average landlord insurance quote in 2023 was £224.93. This was for a basic buildings-only insurance policy with no added extras – it’s also based on quotes for properties of all sizes, across the UK and covers all tenant types.
Just how much landlord insurance costs in reality, comes down to numerous different factors, including:
Your property
The size, structure and age of your property will all have an impact on the cost of landlord insurance.
As a guide, bigger and more expensive properties cost more to insurance than smaller, cheaper ones as repair and rebuild costs tend to be higher.
Likewise older properties will be more costly to insure than newer, modern homes. They’re often more prone to subsidence or damp and could have outdated plumbing, drainage and electrics.
Location
Your property’s postcode is also important. Typically, landlord insurance will be more expensive in London and the South and cheaper in the North to reflect property values.
However, local factors will come into play, too – for example, a higher crime rate could push the cost of cover up. Insurers will also want to take the risk of natural disasters into account, for example whether there is an increased risk of flood or storm damage.
Your tenants
Insurers will view some tenants as riskier than others. You will likely pay more, for example, if you let to students, rather than employed professionals.
They will also want to know if you don’t have any tenants. Unoccupied properties can be expensive to insure as there’s a higher risk of problems, whether it’s a break-in or burst water pipes.
Rental income
If you include loss of rent cover in your landlord insurance, the amount of rent your tenants pay, will be an important driver of cost. The higher your rental income, the more your insurance will cost.
The extras you choose
Every piece of optional cover you add to your policy will boost the cost of your landlord insurance. Accidental damage and contents insurance are amongst the most expensive.
Claims history
Insurers will also take into account your claims history when calculating the cost of your landlord insurance. The more claims you have made previously, the more you will likely pay for your cover.
How to find the best landlord insurance provider for you
With so many options, it can be hard to know how to go about finding a policy that offers everything you want at a price you’re happy with.
A comparison site is a good first port of call – and it can be beneficial to try more than one, since they’ll work with different providers.
Some providers, such as Direct Line and NFU Mutual, don’t appear on comparison sites, so you’ll need to go to them directly to find out more about the policies they offer.
It’s important not to focus solely on price. Compare each element of the policies you are considering to ensure you understand what you are paying for and whether you’re getting value for money.
Finally, give careful consideration to the level of cover you buy. Optional extras can be good value but only buy those you need. It’s often helpful to think about how much you have in savings, that you could call on in an emergency.
If you don’t have a strong cash reserve, or it’s earmarked for other expenses, insurance for things such as loss of rental income becomes more important.
Understanding the jargon
When you’re comparing landlord insurance you will come across a lot of “insurer-speak”. Here’s what some of the most common terminology means:
Excess: This is the amount you pay towards the cost of a claim. The compulsory excess is the amount that must be paid, while a voluntary excess is an amount you agree to pay in return for a lower premium. Always check the excess you will need to pay to claim and note it can vary depending on what you are claiming for.
Exclusions: These are the things your policy won’t cover you for. A common exclusion, for example on buildings and contents insurance, is accidental damage – unless you have dedicated accidental damage cover, which is usually available as a bolt on. However, always check the exclusions on your policy as they vary between insurers.
Rebuild cost: This is the amount of money it would cost to rebuild your property from scratch if it was damaged beyond repair (for example, in a fire or after a flood). It’s different to the market value and based solely on the cost of materials and labour.
Waiting period: This is the length of time you need to wait before you can claim. Used by some insurers, this prevents landlords taking out policies in the knowledge that they are about to claim (for example taking out home emergency cover after their boiler has broken down).
Peril: This is insurance companies’ word for the specific risks they are covering you for, whether that’s fire, flood or malicious damage.
Landlord insurance FAQs
How much does landlord insurance cost each month?
The average cost of buildings-only landlord insurance is just under £225 a year according to the Alan Boswell Group, which works out at under £19 a month.
However, this is just an average and the amount you pay depends on the size, age and structure of your property as well as its postcode. It will also cost more if you want extras such as legal expenses cover or cover for loss of rental income.
How can I get cheaper landlord insurance?
To ensure you don’t pay more than you need, shop around for landlord insurance with a price comparison website. You should also think carefully about how many optional extras you add to your policy as they will all boost the cost.
Savings can often be made by paying annually (rather than monthly, as interest charges will be added) and increasing your voluntary excess.
Is it worth having landlord insurance?
If you have a mortgage on the property you are renting, your lender will likely require you to have building insurance as a minimum.
However, even if you own a property outright, it’s important to consider the impact on your finances if you had a break in, or there was a fire or flood and it wasn’t insured.
Whether it makes sense to buy extras such as accidental damage, legal expense cover or loss of rental income will depend on your circumstances and whether you would have the means to cover the cost yourself if you encountered problems.
