Does Landlord Insurance cover loss of rent?

Yes and no. It depends on the circumstances and your definition of ‘loss of rent’. 

Landlord Insurance provides cover for lost rent if your property is left uninhabitable due to something like a fire or flood – known as an “insured event” – for an agreed period (up to two years with a HomeLet policy). 

However, it doesn’t provide financial protection from lost rent if your tenant falls behind with their rent payments.

The technical term for this is “rent arrears”. In this case, you would need Rent Guarantee Insurance.

It’s easy to conflate and confuse the two scenarios. Keep reading for a full explanation of both to ensure you understand precisely what level of cover you need as a landlord.

Landlord Insurance goes beyond the protection offered by standard homeowner's insurance.

While both cover property damage, landlord insurance addresses the specific risks associated with renting out a property.

For instance, you might face financial issues if tenants don't pay rent or if the property stays vacant between tenants.

There's also the risk of property damage and the possibility of encountering difficult tenants.

As well as protecting the building and its contents from things like fire and flooding, Landlord Insurance can provide liability cover for third-party loss or injury on the property and loss of rent cover.

As we’ve mentioned, the loss of rent cover portion of your Landlord Insurance (included as standard with a HomeLet policy) protects your income stream if your property becomes uninhabitable. 

Not all insurers include this protection automatically. It is sometimes offered as an optional add-on instead.

There will also likely be limitations on the amount and duration of rent covered, which you should check in the T&Cs. 

At HomeLet, we cover up to £50,000 of lost rent and re-letting costs for up to two years after an insured event.

So you won’t be out of pocket if rent payments are on hold or if you need to provide alternative accommodation.

Of course, there is a substantial difference between an ongoing loss of rent due to a fire or a flood and lost rent due to tenants falling behind with their rent payments (for whatever reason that might be). 

Landlord Insurance won’t cover you for this type of scenario. Instead, you will need a specialised Rent Guarantee policy that is designed to cover missed rental payments for a specified period of time.

With HomeLet’s Landlord Rent Guarantee Insurance, your rent is paid in full for up to six months or until vacant possession (whichever comes first). 

Our policies also pay 75% of your rent for up to three months during periods of vacant possession. We also provide up to £50,000 of professional costs to assist with eviction proceedings.

Find out more about Rent Guarantee in this blog: How does Landlord Rent Guarantee Insurance work?

You’re not legally obliged to have loss of rent cover in place. However, it can be a great source of comfort should you be unfortunate enough to find that your rental property is uninhabitable due to an insured event.

It’s also worth noting that you might be in breach of your tenancy agreement if you’re contractually obliged to rehome your tenants. Your mortgage lender may also demand it as part of your Buy-to-Let agreement.

In both cases, it pays to read the small print and familiarise yourself with your contractual responsibilities.

From a compliance perspective, loss of rent cover can be essential. But more than that, if a period of lost rent would cause significant strain, then having loss of rent cover is a wise investment for your financial well-being.

Whether you require Rent Guarantee Insurance is more a matter of personal choice, based on your past and present tenants.

However, in a cost of living crisis, even the most reliable tenants can fall on hard times.

If you would struggle to meet your mortgage repayments or to generally make ends meet if your tenants were to miss their rent payments, Rent Guarantee Insurance can protect you from financial hardship and stress.

Landlord Insurance offers valuable protection for your rental property. Inbuilt loss of rent cover can provide much-needed financial security during unforeseen events that render your property uninhabitable. 

Without this cover in place, landlords face the double burden of losing out on monthly rent payments and footing the bill for rehousing their tenants. Therefore, it pays to protect your interests should the worst ever happen.

Remember that loss of rent cover in the context of Landlord Insurance only covers lost rent and reletting costs due to insured events. It won’t pay for lost rent if your tenants fall into arrears. This requires Rent Guarantee Insurance.

Consider your needs and ask yourself: "What landlord insurance do I need"? All landlords should take out some form of Landlord Insurance, and when you purchase a HomeLet policy, loss of rent cover is included as standard.

However, if you’re worried about the potential of missed rent payments and the impact this could have on your finances, you might want to supplement your protection with Rent Guarantee Insurance.

With the right protection in place, you'll have peace of mind knowing that you're prepared for the unexpected.

If you need any support with your decision-making process, HomeLet’s experts are always here to help.

For more information about our Landlord Insurance (which includes loss of rent cover) and Rent Guarantee Insurance, please contact us on 0800 035 8258 or request a callback to discuss your needs.