Is Landlord Insurance Compulsory?

Is landlord insurance compulsory in the UK?

No single law requires a landlord to hold landlord insurance. In practice it is close to unavoidable, because mortgage lenders require buildings cover, leases require the building to be insured, and letting a property on an ordinary home policy usually breaches that policy's terms.

The only insurance a landlord is legally obliged to hold is employers' liability, and then only if they employ someone — a caretaker, cleaner, gardener or handyman engaged as an employee rather than an independent contractor.

Everything else is contractual or commercial. That does not make it optional in any meaningful sense: an uninsured landlord carries the full cost of a fire, a flood or a liability claim personally.

Read next: What landlord insurance covers

Do I need landlord insurance with a buy-to-let mortgage?

Yes in nearly all cases. Buy-to-let mortgage conditions require buildings insurance for at least the reinstatement value, with the lender's interest noted, and failing to maintain it is a breach of the mortgage terms.

Lenders may specify a minimum sum insured, require particular perils, or require that they are notified of cancellation. Some will arrange cover themselves and charge it to the borrower if the policy lapses.

For a leasehold flat, the lender's requirement is normally satisfied by the block policy arranged by the freeholder or management company, and the lender will ask for evidence of it.

Read next: Leasehold flats: who insures what

Can I let a property on my normal home insurance?

No. Standard home insurance is written for owner occupation, and letting the property is a change of use that must be disclosed. Continuing on a home policy after letting usually means a claim will not be paid.

This catches out accidental landlords in particular — people who move in with a partner, inherit a property or relocate for work and let the old home out without changing the policy.

Telling the insurer is the fix, and it is straightforward. Either they will amend the policy or they will not write the risk, in which case a landlord policy is arranged instead.

Things to consider

• Consent to let from your lender is a separate requirement from insurance.
• Letting to family is still letting as far as most home insurers are concerned.
• Short-term and holiday lets need their own specific cover.

Read next: When the property is empty

What insurance does a landlord legally need?

Only employers' liability, and only where the landlord employs someone at the property. Buildings, contents, liability and rent cover are required by contract — mortgage or lease — rather than by statute.

Employers' liability is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969 and carries daily penalties for non-compliance. Genuinely self-employed contractors carrying their own public liability do not trigger it.

Property owners' liability, while not compulsory, is the cover most landlords would least want to be without, because injury claims are unpredictable in size.

Read next: Property owners' liability explained