Being a landlord can be hugely rewarding, but it’s also a big responsibility. Not only do you have the responsibility of property ownership, but by renting the property out you open yourself up to a wide range of additional risks.
Fortunately, there are plenty of excellent insurance policies out there that are designed to protect both you and your property. But what exactly does landlord insurance entail? And how do you know which policy is right for you? Here is everything you need to know about landlord insurance.
In Ireland, it is not compulsory to have landlord insurance if you are letting out a property, though some lenders will require it if you are taking out a buy-to-let mortgage. In any case, having good landlord insurance is highly recommended to protect your investment and help you deal with any unexpected incidents. Landlord insurance is similar to home insurance, but with some key differences geared towards managing a rental property. As there are other people involved, there is another set of potential issues to be dealt with, so it’s important that you opt for a specialist policy that will cover all eventualities. There are plenty of providers out there who offer landlord insurance, and you should always compare not only the cost but also the coverage of each policy before making a choice. Each insurer will have their own standard acceptance criteria, usually based on the construction and condition of the property. In the vast majority of cases, you should have no trouble finding a suitable policy.
What Should Landlord Insurance Cover?
Exact coverage will vary depending on the type of property you own, the insurer and the policy, but generally speaking you can expect landlord insurance to cover the following.
As a property owner, if damage or injury is caused by contents in your rental property then you will be liable to pay. Depending on how severe the outcome, this can sometimes result in huge payouts that would significantly impact your day to day life if you had to pay out of your own pocket. Landlord insurance providers will compensate you up to a certain amount (usually six figures for one occurence), helping to lessen the blow should the unexpected happen.
Loss Of Rental Income
If your property becomes uninhabitable due to serious damage, then you could be without rental income for an extended period of time. Good landlord insurance will cover costs to provide alternative accommodation for your tenants as well as storage for their belongings. At the very least, you can expect a percentage of rent lost (usually around 15 to 20%)
Note that landlord insurance does not usually cover loss of rental income as standard when a tenant simply stops paying. However, many insurers provide this as an optional extra, so make sure to ask if this is something you are interested in.
This covers the cost of any loss or damage caused to the structure of the building. It usually includes everything from burst pipes and fallen lamp posts to fires, floods and vehicle collisions. In the event that you should need it, the building insurance should cover the cost of a complete rebuild. Some policies will even include things like surveyor’s fees, debris removal costs and other charges.
Note that if you own a rental flat as opposed to a house, you should not need building insurance (it should be covered under the management company’s policy but request a copy to make sure). Most insurers offer a contents only policy that is better suited to your needs. This should still include all of the other benefits included in this list.
Fire Brigade Charges
In Ireland, local authorities are permitted by law to charge for fire services. The charges will vary depending on the nature of the service and what authority the property is in, but they can be as high as €2000. To make sure you are not left with the bill, check that fire brigade charges are included as part of your cover.
In the event of a sudden situation like a burst pipe, insurers should have emergency assistance in place at all times. Having assistance available 24/7, 365 days a year will help prevent any urgent problems from escalating and causing further, unnecessary damage. Most landlord insurance policies will allow for a certain number of emergency call outs a year and are often not recorded as claims against your policy. The cover provided will also usually include the cost of labour and materials to carry out the repairs (up to a certain amount).
If you are letting a furnished or part-furnished property, you may wish to look for a landlord insurance policy that also covers loss, damage or theft of your contents. Landlord insurance does not cover damages caused to your tenants personal possessions while they live in the property. It is down to the tenant to organise their own contents insurance if this is something they are concerned about.
How To Save Money On Landlord Insurance
The cost of your policy will depend on a range of factors including the rebuild cost and location of the property, the type of policy you choose and even the number and type of tenants you have. However, there are a few things you can do to help lower the costs. For instance, you can:
Make sure the property is secure and install an alarm system (this will reduce the risk of burglary and have an impact on your premium)
Fit smoke alarms, fire blankets and fire extinguishers
Pay the premium upfront if you can to avoid interest on monthly payments
Shop around and compare at least three quotes before making a decision
Buy online rather than over the phone as you will often get a discount
Consider increasing the policy’s excess, if possible
Say no to pets in the property (as there is an additional risk that pets would cause damage requiring some kind of claim e.g. a ruined carpet)
Go without content insurance if your property is either unfurnished or only furnished with items that you have no real concern for (e.g. old or second hand furniture and appliances)
There are also certain discounts that some insurers offer that may make their policy more appealing and make more financial sense.
No Claims Discount
Good insurers should always offer a discount on your premiums after a certain period of time with no claims. While no one can guarantee that you won’t need to make a claim, a generous discount is a good incentive as it can significantly lower your costs over time.
If you own (or are planning to own) more than one rental property, then it’s not a bad idea to look for a policy that offers discounts for multiple properties. Even if you are unsure how far you want to take your property portfolio, having the option of a discount in place can save the hassle of changing insurers further down the line.
Existing Customer Discount
It’s worth checking with your own home insurance provider first to see if they also offer suitable landlord insurance. They will sometimes offer a discount if you choose to take out another policy with them (though it’s still worth checking with other insurers to make sure the discount will be worth it). Read our post on Everything You Need to Know About Rent Pressure Zones as well.
When it comes to landlord insurance, it’s always better to have more cover than you think you’ll need rather than not enough. While it’s good to cut back on expenses where you can, paying less for an insufficient policy could cause you great financial hardship in the long run if the unexpected happens.
Whichever policy you choose, it’s important that you are crystal clear about what exactly is included and what is an optional extra. By taking the time to look through all the information carefully, you can have peace of mind that you are well protected against all eventualities.
If you are a landlord in Ireland and would like some professional, unbiased advice in finding the best insurance, we would be happy to help. Simply head over to our contact page and we’ll get back to you as soon as we can.