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Although landlord insurance isn’t a legal requirement, a conventional home insurance policy won't cover you for the extra risks associated with rental activities. And if you have a mortgage on your property it's likely that your lender will require you to take out a specialist landlord insurance policy before you rent your property out to tenants.
As a landlord you need buildings insurance to protect your investment from loss. A total loss of your property from say fire, explosion or collapse due to subsidence, if you don’t have appropriate insurance cover, would be a disaster – you would lose everything you have worked for.
Providing you’ve been honest with your insurers about all the risks, kept them informed of any changes, and insured your property for the correct rebuild value, then your insurer will indemnify you against the full loss. In other words, after your claim you will get the full rebuild costs paid and you should be in the same position as you were before the loss.
Although buildings insurance, which will cover you for property loss, is very important, liability insurance is arguably even more important. That’s because if you have a total loss and you have no insurance, the most you can lose is the value of the property. However, if you have a liability claim against you, for example if someone dies or is seriously injured as a result of you neglecting to do something, then your loss could be virtually unlimited – claims for which you are found to be liable could run into millions of pounds.
That’s why it’s so important to make sure that your landlord policy is totally suitable for your needs and covers you adequately for third party liability claims – all good landlord policies do this, but not if you have the wrong type of policy, for example, if you are relying on a standard home owners policy when renting out a property.
Never rely totally on these general guidelines which apply primarily to England. They are not definitive statements of the law. Before taking action or not, always seek professional advice with the full facts of your case and all documents to hand.
No, property owner's insurance and building insurance are not exactly the same, although they can overlap in coverage.
Building insurance specifically covers the physical structure of a building including the walls, roof, floors, and often fixtures and fittings within the building with typical inclusions of protection against risks such as fire, storms, floods, vandalism, and structural damage. It is usually required by mortgage lenders for homeowners, landlords, or property owners to protect the value of the building itself.
Property owner's insurance is a broader type of insurance that typically includes building insurance but also extends to liability coverage, protecting the owner against legal claims if someone is injured on the property or if the property causes damage to another property. It can also cover contents insurance (optional) covering belongings within the property, which can be important for landlords furnishing a rental. It may also cover lost rental income if the property becomes uninhabitable, and the cost of alternative accommodation for your tenants.
These policies are often tailored to landlords, property investors’ requirements, and also homeowners who might rent out part or all of their property.
Property owner’s liability insurance is almost always included as standard in a landlord insurance policy. It protects you if a tenant, visitor or simply someone passing the property is injured as a result of something to do with your property. A loose tile could fall from the roof or a hand rail might be wonky resulting in fall. These are items you should perhaps have paid more attention to and for this you could be deemed liable. The essential liability cover for these sorts of events is known as public liability insurance for landlords.
Property owner’s liability will protect you against costs and expenses incurred in respect of:
In the UK, a landlord’s ‘duty of care’ refers to the legal obligation landlords have – both under common law and statutory regulations - to ensure the safety, health, and welfare of their tenants and any visitors to the rental property. This duty of care is general as well as imposing specific obligations including gas, electrical and fire safety and other hazards as measured by the housing health and safety rating system (HHSRS).
It also covers repairs to the building structure, plumbing and heating and fixtures and fittings. Landlords are also obliged to protect deposits, check tenants for their right to rent, and they must provide information such as appliance operating instructions, an energy performance certificate (EPC), the government’s How to Rent guide and details of who is responsible for managing the property.
As a landlord it is your responsibility to make sure that the above obligations are met and that your property is as safe as possible. To do so you should carry out regular checks – using a risk assessment - and you should always carry out repairs when needed and as soon as you are advised of a defect by your tenant.
There are five key steps landlords should take to reduce the risk of liability claims:
Where someone is injured on the rental premises, whether inside the premises or around it, there is likely to be a claim against you so it is very important you do all you can to minimise risks.
Yes, a landlord’s liability insurance typically covers negligence. This type of insurance is designed to protect landlords from financial losses associated with claims due to your negligence. After all, with a rental property it’s possible to be negligent without knowing about it.
Landlord liability insurance will usually cover legal costs, medical expenses, and settlements or judgments related to claims of negligence subject to policy limits and exclusions. Most insurance policies have limits and exclusions, so it’s important you understand the specifics of your policy.
You should review your insurance policy in detail and consult with your insurance provider to fully understand the scope of the policy coverage, including any specific conditions or exclusions that might affect your liability protection.
A landlord's liability for injuries to persons on or near their premises can be onerous if it is shown that you have neglected your duties, perhaps by failing to fulfil your health and safety obligations in some way. Ultimately, claims for death or personal injury can be both stressful and very expensive, hence the need for a comprehensive landlord insurance policy.
Here are some statistics from Total landlord:
These claims are still quite modest compared with a claim involving death or serious, potentially life changing, injuries.
“Our Premier policy offers cover up to £5 million for landlord liability, and will protect landlords against claims for negligence involving injury to tenants, their guests and the general public. Bear in mind, you should be doing everything you can to prevent and mitigate claims of this nature. You should read the clauses on liability insurance in your policy and make sure you understand them.”
- Steve Barnes, Head of Broking at Total Landlord
A landlord's liability to repair will depend on their contractual obligations under the tenancy agreement and also statutory rules and regulations.
Whereas a residential landlord is responsible for all substantial repairs, for commercial landlords this will depend on the lease repairing obligations and the rights of access the landlord has over the premises. The situation is further complicated when there are multi-occupied commercial promises with common areas as the landlord or managing agent will likely be the “responsible person” tasked with health and safety duties.
Under the provisions of the Occupiers' Liability Act 1957, anyone injured while visiting the property may seek compensation from the occupier (not necessarily the owner in the case of commercial property).
Where commercial premises are rented, the claim would be brought initially against the occupier (the tenant). However, in a situation where injury occurs because of the disrepair of the premises the landlord may find themselves in the firing line.
Where the landlord has a duty to repair and has not carried out the necessary work, the claimant may have the same rights against the landlord as against the tenant.
The landlord would usually only be held liable if it could be shown that they should have been aware of the defect, or if they had been notified of the defect which caused the injury and were "on notice" to do the work.
Under the Defective Premises Act 1972, premises let under a tenancy where the landlord is obliged to carry out repairs (all assured shorthold and residential tenancies) the landlord has a statutory duty to take reasonable care to make sure that those at risk of injury, including occupants and visitors, are protected from personal injury.
This duty applies where a landlord knew, or ‘ought to have known’ in the circumstances, of a defect which could result in an accident / injury. The landlord's position on this was clarified by an appeal court decision in the case of Sykes v Harry and another [2001]. The tenant and his wife on a shorthold tenancy (AST) suffered from carbon monoxide poisoning which led to brain damage.
The tenants claimed that the landlord was in breach of his implied obligations under Section 11 of the Landlord and Tenant Act 1985 to keep the property in good repair, which included the servicing of the gas fire, and also for his breach of the duty of care owed by a landlord under Section 4 of the Defective Premises Act 1972.
The obligation under the 1985 Act applies only where a landlord has knowledge of a defect. The judge in the first hearing held that a breach of covenant could not be established and ruled that there was no 'relevant defect' as required by Section 4. The landlord was not to be held liable.
However, on appeal the appeal court judge held that where a landlord ought to have known of a defect, this would be sufficient under Section 4 of the Defective Premises Act 1972 for the landlord to be held liable. The landlord was therefore held to be liable. Although he was not aware of the defective fire, he should have known that a gas fire requires regular maintenance.
Under a commercial full repairing and insuring (FRI) lease, where repairs are the responsibility of the tenant, the landlord may be in a position to avoid any liability for injuries as a result of defects in the property.
In the case of Hannon v Hillingdon Homes Limited [2012], which concerned a landlord's liability under the Defective Premises Act 1972, it was shown that commercial property landlords can be held liable in certain circumstances. A commercial landlord can be held liable under the Defective Premises Act if the lease contains provisions such as:
In any case landlords of multi-occupied premises, whether residential or commercial, are responsible for the maintenance of the common areas, which usually includes fire safety, fire escapes, fire alarms, firefighting equipment etc.
In theory, landlords could be held liable for injuries caused by defects due to changes made by their tenants, even if these changes are in breach of the lease terms. Commercial landlords in particular, but also residential and HMO landlords should be aware of the clauses in their agreements regarding management responsibilities.
Landlords should have procedures in place to carry out regular inspections and risk assessments where this is appropriate and legally required.
The case in English Heritage v Taylor [2016] nicely illustrates the position that a landlord's liability is not confined to the inside of premises. Maintaining grounds and being aware of the potential dangers are also very important.
In this case the plaintiff sustained a severe head injury following a fall while visiting Carisbrooke Castle on the Isle of Wight.
Within the castle's premises there existed an elevated platform situated at one corner. Beneath this platform lay a grass pathway, and a steep slope descended from the platform to a grassy area.
On the opposite side of the platform a slope dropped steeply into a dry moat. The claimant ventured down the path where he lost his footing and tumbled into the moat.
The presence of the moat was not readily apparent to someone taking the same route as the claimant. There were no warning signs indicating the danger.
While occupiers are not obligated to caution against obvious risks, the court determined that this particular risk was not readily apparent. Consequently, it concluded that the defendant had breached its duty under the Occupiers' Liability Act 1957. However, in this case the court also assigned 50% contributory negligence to the claimant.
The court underscored its obligation to consider all circumstances, including the degree of obviousness of the danger and, in suitable cases, aesthetic considerations. Owners and in some cases occupiers, are expected to take reasonable measures to address potential hazards.
If a liability claim is made against you as a landlord, there are several important steps you should take to protect yourself and make sure the claim is handled properly:
Always make sure your policy includes appropriate property owners’ liability cover up to at least £2 million and ideally £5 million. It is a vital element of a landlord insurance policy to make sure you are covered for the potential risks involved, particularly against death or injury to individuals.
The cover should extend to damages awarded to the claimant, legal expenses and all costs involved in defending a claim, medical expenses, loss of income and also the claimant’s legal costs if you are found at fault.
