What is the difference between landlord insurance and home insurance?

Renting out a second property is a great way of providing a little bit of extra income for your retirement. However, there’s always a chance your nest egg could cause some undue stress if you don’t have the right type of insurance. Here at Insure4Retirement we are often asked about the differences between our landlord insurance and our home insurance, so we’ve written this short guide to help you understand why home insurance doesn’t quite cut it when it comes to renting out a property.

Why is landlord and home insurance different?

There are two main reasons that a home insurance policy isn’t suitable when you rent out a property.

The first and most simple reason is that a rented property is essentially a business premises. Landlord insurance is designed specifically for that principle whereas home insurance is designed for private home-owners.

The second reason is down to maintenance. As a home-owner, you’re at your property on a regular basis, which means you can easily maintain it and notice when things go awry. With a rental property however, you can’t simply pop in and check on it whenever you want. As a landlord, you largely rely on your tenants to let you know of any problems, such as damp, leaks, or broken fixtures. Your tenants are also less likely to be concerned about the general upkeep of your property than you are.

Landlord insurance policies feature extra lines of cover that protect you against the business responsibilities and maintenance issues of being a landlord. These include:

Legal expenses

There is always a chance that you may end up having a dispute with your tenants. While home insurance might cover the legal expenses of taking tradespeople to court, it won’t cover you if you need to take a tenant to court over unpaid rent. Landlord insurance provides this extra cover.

Loss of rent

If your tenant can’t pay the rent, withholds the rent, or if your home becomes uninhabitable, landlord insurance will cover you against loss of rent. There is simply no equivalent in a home insurance policy. This is even more important if you have a buy-to-let mortgage and want to ensure your mortgage payments are met.

Alternative accommodation

If your home becomes uninhabitable because of a flood or other major event, a home insurance policy will provide alternative accommodation for the owner/occupier, but not the tenants. When the property is occupied, you have a legal responsibility to provide the tenants with alternative accommodation. A landlord insurance policy can help you do that.

Public liability

Even though home insurance will include some public liability cover, such as a tradesman tripping on your garden path, when it comes to running a property as a business, you need extra cover for your extra legal liabilities. If a tenant takes a fall because of a broken skirting board and decides that the injury was due to the property, landlord public liability cover will protect you if they decide to make a claim.

We hope this guide has helped you to understand the difference between home and landlord insurance. If you’re a landlord and want to make sure you’re fully covered, get an online quote from us today or call our experts free on 0808 159 2889.