Landlord insurance in the UK: Why accurate rebuild costs protect your property
- RebuildCostASSESSMENT.com
- 9 hours ago
- 6 min read
Protecting your investment the right way
At RebuildCostASSESSMENT.com, our mission is clear: to eradicate inaccurate building sums insured across the UK. This problem affects more landlords than many realise. 76% of UK properties are underinsured. As a result, many landlords risk financial loss and may even breach their mortgage terms.
This guide gives landlords the clarity they need. If you are letting a flat for the first time, or managing several properties, it explains what landlord insurance is and what it covers. Most importantly, it shows why getting your rebuild cost right is essential to protect your investment.
We are a RICS-regulated and FSQS-accredited provider. Our role is to deliver trusted, expert guidance. With the right cover in place, landlords can be confident their insurance is accurate, their responsibilities are met, and their property is secure.
What is landlord insurance? (And why your home insurance is invalid)
Landlord insurance is a specialist policy for rental property owners. It protects against risks that standard home insurance does not cover. It includes buildings cover, public liability, loss of rent, and sometimes protection against malicious damage by tenants. It is the only valid type of insurance for a property that is rented out.
If you rent out a property with only home insurance, your cover is invalid. Home insurance applies only to owner-occupied homes. It will not cover the risks of letting.
These include:
Public liability if a tenant or visitor is injured.
Loss of rent if the property becomes uninhabitable.
Damage by tenants, whether accidental or deliberate.
This is not a small detail. Most mortgage lenders require landlord insurance, not home insurance. Using the wrong policy could mean a rejected claim. It could also leave you in breach of your loan.
For UK landlords, landlord insurance is essential. It protects your property, your income, and your legal responsibilities.
Is landlord insurance a legal requirement in the UK?
No, landlord insurance is not required by law in the UK. The Landlord and Tenant Act and other legislation do not compel landlords to take out a policy.
However, in practice, landlord insurance is almost always required. Most buy-to-let mortgages include a clause that demands the property is insured under a valid landlord’s insurance policy, not standard home insurance.
If you fail to comply, you are in breach of contract. Your lender can impose penalties, withdraw support, or take action that could put your finances at serious risk. In short, without landlord insurance you may invalidate your cover and damage your financial stability.
Even landlords without a mortgage should think carefully. Rental properties face higher risks, including tenant injuries, accidental damage, and malicious damage. The cost of even one uninsured claim can be devastating.
Practical tip: Unsure about your own mortgage terms? Check the insurance clauses in your agreement to confirm what cover is required.
What core protections does landlord insurance include?
At its core, landlord insurance is designed to protect two things: your property itself and your responsibilities as the owner. Most standard policies are built around two main pillars:
Buildings insurance
This is the foundation of any landlord insurance policy. It covers the cost of repairing or rebuilding the structure of your rental property after damage caused by insured perils such as:
Fire
Flood
Storm
Escape of water
Subsidence
The crucial point is that buildings insurance is based on the property’s rebuild cost, not its market value. These two figures can be very different, and relying on market value can leave landlords dangerously underinsured. An accurate rebuild cost ensures you have the right level of cover, giving you confidence that if the worst happens, your policy will respond as expected.
Learn more in our guide: Understanding rebuild cost vs market value
A note on free calculators: Some landlords try to estimate this figure using free online rebuild cost calculators. While tempting, these tools are only intended for broad guidance. Even the leading BCIS calculator warns that it should not be used to set the sum insured on an insurance policy. Relying on such estimates risks serious underinsurance. For more detail, read our guide on why free calculators should not be used.
Property owner’s liability
The second essential component is liability cover, sometimes called landlord public liability insurance. This protects you if a tenant, visitor, or even a member of the public is injured at your property, or if their belongings are damaged and you are found legally responsible. For example, if a loose handrail caused a tenant to fall and suffer an injury, this cover would respond to potential claims and legal expenses.
Liability protection is often overlooked by new landlords, but it is critical. Without it, a single incident could result in legal action and substantial financial loss.
What about other protections?
While buildings cover and liability form the essential foundations of landlord insurance, many policies also offer add-ons such as:
Loss of rent if your property becomes uninhabitable after an insured event.
Malicious or accidental damage caused by tenants.
Legal expenses and rent guarantee cover.
These can be invaluable, but they are not always included as standard. Choosing the right mix depends on your property, your tenants, and your appetite for risk.
In summary
Buildings insurance safeguards the structure of your rental property against physical damage.
Property owner’s liability protects against injury or damage claims from tenants or visitors.
Additional options like loss of rent provide extra peace of mind.
Together, these create the backbone of landlord insurance—built on the essential step of getting your rebuild cost right.
The critical mistake: underinsurance and the “Average Clause”
One of the biggest risks landlords face is a little-known insurance condition called the Average Clause. In simple terms, if your property is insured for less than its true rebuild cost, your insurer can reduce any claim by the same percentage. This applies no matter how big or small the claim.
How it works
Imagine your property should be insured for £250,000, but your policy is only set at £200,000. That means you are 20% underinsured. If the worst happened and you suffered a total loss, such as a devastating fire, your insurer could reduce the payout by 20%. Instead of receiving the full £250,000 needed to rebuild, you might only receive £200,000, leaving you £50,000 short.
The same principle applies to smaller claims. Suppose a kitchen fire occurs and causes £20,000 worth of damage. Because you are 20% underinsured overall, the insurer could legally reduce this claim by 20% too. Instead of £20,000, you would receive just £16,000, leaving you £4,000 out of pocket.
This is the hidden danger of underinsurance. Without an accurate rebuild cost, landlords risk significant financial loss at every level of claim. Learn more about the Average Clause here.
Free rebuild cost calculators can make this problem worse. They may give a rough figure, but they are not designed for setting insured values. Relying on them can leave landlords unknowingly exposed to the very risks the Average Clause enforces.
The solution: A professional rebuild cost assessment
As RICS-regulated and FSQS-accredited experts, we provide an affordable, fast, and efficient way to ensure your property is insured for the correct amount. Our Desktop Rebuild Cost Assessments start from £199.75 including VAT and are typically completed within 10–12 working days. For more complex properties, we also offer detailed on-site assessments.
These assessments use a cutting-edge digital approach to deliver accuracy and peace of mind, ensuring your landlord insurance will respond as expected.
Real-world impact
Recently, one landlord avoided a £39,000 shortfall on a claim thanks to an accurate RCA valuation that prevented them from being underinsured. Read the full story here.
Concerned you might be underinsured? Discover how a professional rebuild cost assessment guarantees peace of mind.
Secure your asset and your peace of mind
Ultimately, landlord insurance is an essential tool for any responsible landlord. It safeguards your rental property against unforeseen risks and helps you remain compliant with your mortgage obligations. But it is only effective when built on the right foundations: an accurate rebuild cost.
At RebuildCostASSESSMENT.com, our mission is to eradicate underinsurance. As RICS-regulated and FSQS-accredited experts, we provide trusted, professional assessments to ensure your cover reflects your property’s true rebuild cost.
Best practice is to update your rebuild cost assessment every three years, or sooner if you renovate or if building costs change significantly. Find out more about how often to review your RCA here.
👉 Ready to secure your investment and gain peace of mind?
Other helpful resources
Important disclaimer: The information provided here is for general informational purposes only and is not intended as professional advice. While we strive to ensure all information is accurate and up-to-date, the content may not reflect the most current legal or regulatory developments, standards, or practices. No representations or warranties are made (express or implied) about the accuracy of the information provided, and reliance on this information is strictly at your own risk.
We do not offer financial advice and nothing within this content should be construed as such. We recommend consulting with a qualified professional who can provide tailored advice based on your individual circumstances before making any decisions related to insurance.
Please note that we are not regulated by the Financial Conduct Authority (FCA) and as such, are not qualified to provide specific financial or insurance advice. Please see our footer for further information about us, including our website terms of use, privacy policy and more.
