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Landlord insurance is crucial for anyone renting out a property

A good, comprehensive landlord insurance policy will not only cover your building in the event it’s damaged by flood or fire, but can also cover:

  • The contents you supply for a tenancy, including furnishings and white goods
  • Items, fixtures, or fittings that are accidentally damaged
  • Your rent losses should your tenant default on their payments

 Another aspect of insurance you may wish to consider is landlord liability insurance.

But what is it and why do you need it?

This guide has all the answers…

What is landlord liability insurance?

Landlord liability insurance covers individuals and businesses against compensation claims if someone is injured or their property damaged, and that business or individual is held responsible.

Do landlords need liability insurance?

Liability insurance isn’t a legal requirement for  landlords

However, it does protect you against injury and damage claims that might be brought by your tenant.

Not only that, but it also guards against claims by third parties who may have been invited into the property by your tenant.

All landlords have a responsibility towards their tenants and their visitors, and anyone visiting a rental property should be safe.

But should your tenant or a visitor to your property be unfortunate enough to injure themselves while there, landlord liability insurance could cover any compensation or legal fees you may face.

Let’s consider an example.

If your tenant’s partner were to visit and trip on a loose floorboard or a piece of carpet sticking up and they injured themselves badly enough to need time off work, you could be looking at a hefty compensation bill, not to mention legal fees.

Landlord liability insurance, in that sense, offers complete peace of mind.

What does landlord liability insurance cover?

As well as compensation claims resulting from someone being injured when visiting or living in your rental property, landlord liability insurance can also cover:

  • Damage caused to someone else’s property while working or visiting your rental property
  • Your legal fees and the fees of the claimant
  • Claimant’s loss of earnings and medical bills

Landlord liability insurance doesn’t generally cover injury or damage claims brought by employees.

So, if you employ someone, for instance a maintenance person or a lettings manager, directly, you may need to take out employer’s liability insurance as additional cover.

Does landlord insurance have liability cover?

Many standard landlord insurance policies have liability cover included – but some don’t.

If you decide you need liability cover, you should check to see if your policy includes it or speak to your provider about bolting it on to your policy.

 How much cover should I take out?

Compensation figures in liability cases can be high and the legal fees can also be substantial.

For example, if a visitor to your rental property was to trip on a piece of loose flooring, fall down the stairs and suffer life-changing injuries, you could be liable for medical bills and income for the rest of their life.

So, liability cover for landlords is often between £2million and £5million.

However, the exact amount of cover will depend on your needs and personal circumstances.

 How much does landlord liability insurance cost?

For landlords, liability insurance can cost as little as £40-£50 per year.

However, the exact cost will depend on the cover and with many policies including liability cover as standard, it’s likely the cost will be absorbed into your annual landlord insurance premium.

 Tenants’ liability insurance

It’s not just landlords who can take steps to protect themselves – tenants, too, can take out their own liability insurance should they wish to.

Tenants’ liability insurance essentially protects a tenant’s deposit should they accidentally damage fixtures or fittings in your property.

So, rather than deduct from their deposit to replace a carpet stained with red wine, the tenant’s insurance provider pays out and their deposit is returned in full.

Most policies range in cost between £5 and £10 per month, so it would be down to the tenant to consider whether this offers value or if they should rely on their deposit to cover any damage

Please note that Carrick Johnson Lettings and Property Management strongly advises that you talk to qualified insurance and financial advisors when making any decisions impacting on the protection and financial security of your property.