Friday, May 24, 2024

Does landlord insurance cover liability?

Yes, landlord insurance typically includes landlord liability insurance, sometimes called property owner’s liability cover. It is important because along with possible injury claims from tenants, landlords are also responsible for any accidents or injuries at a property that involve a third party. Should anyone visiting the property suffer loss or damage resulting from negligence or poor building maintenance, they may leverage a claim against the landlord. To limit their exposure to risk and protect against claims, landlords can obtain property insurance including liability coverage through NimbleFins.

Successful liability claims can often result in large settlement payments, and the cost of a legal defence adds to the expense. Having landlords liability coverage will shield the property owner or landlord from paying costs out of pocket. Without the correct coverage in place, building owners or landlords will be personally responsible for paying any successful claims, and any costs associated with them. 

With annual property maintenance costs already running high, it is wise for landlords to protect themselves from additional expenses resulting from legal proceedings. For example, landlords typically spend around £256 on general maintenance a year, £313 on repairing structural damage, and £370 on refurbishment.

The amount of landlord insurance coverage needed will depend on the level of risk assessed. Compensation claims can run into tens or hundreds of thousands of pounds so limits will need to be adequate to meet the expense. Coverage limits for landlord insurance policies typically fall into the £2 million to £5 million range, with higher limits being needed for larger or older properties. 

For commercial properties that have a much higher exposure to risk, policies will need limits that are sufficient to protect from any potential claims. In addition, local authorities or other agencies may require landlords to have a policy in place with specified minimum limits. 

What is landlord insurance?

Landlord insurance is designed to shield landlords from claims made by renters. It can also cover building damages and provide protections against things such as non-payment of rent, accidental damage. Most basic landlord insurance policies start with building insurance and property owners’ liability insurance. Other protections may be added to the policy and limits are flexible to cover different levels of financial responsibility. For example, a single apartment will require much lower policy limits than a commercial office building. 

Landlord-tenant law requires certain criteria to be in terms of maintaining a safe and usable property, but there is still the chance that tenants may bring a claim against the property owner for a number of reasons. 

For claims brought against the landlord, having adequate landlord liability insurance in place will limit financial exposure and cover expensive settlement payments. Coverage typically includes protection from incidents like flooding, fire, or damage to the property from third parties. This can include things like breakages or defacement caused by vandalism or burglary. Malicious damage by tenants may also be covered but typically requires a special add-on to the policy. 

Does a landlord need property owners’ liability cover?

Although there is a reasonable risk of landlords being subject to injury or accident claims, property owners’ liability cover is not required by law. Acquiring a policy of this kind is completely optional for landlords. However, with the number of risks associated with property rental, most landlords recognise that having protection makes good business sense.

To make a liability claim the claimant has to prove that the landlord was negligent or failed to maintain the building to a safe standard but typically a large number of claims arise from things such as:

  • Uneven or damaged pathways
  • Damage or poorly maintained flooring
  • Falling plaster from ceilings or walls
  • Worn, loose, or uneven carpeting
  • Damaged stair rails or loose handrails

Landlords have a responsibility to keep their property safe and free from health hazards, and must perform the required safety inspections for items such as fire extinguishers, boilers, and electrical systems. Failure to maintain the proper inspections can void your insurance policy so it is important to ensure all checks are up to date.

How much does landlord insurance cost?

The average cost of a landlord insurance policy will fluctuate depending on the type of property being insured. Factors like the costs of rebuilding the property and the level of risk are calculated to determine premium amounts. According to NimbleFins, a standard policy for a typical one-family home that includes building and public liability cover only will have an average premium of around £170 a year.

This payment estimate does not cover additional protections which the landlord may choose to add such as:

  • Rental income protection
  • Accidental damage 
  • Content insurance

As more policy features are added the monthly premium will rise accordingly. Property location and age can also be a factor, with older properties tending to cost more to insure than their newer counterparts. 

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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