Investment Property Insurance
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Investment Property Insurance
Owning a property as an investment can involve a range of risks, from damage to the building and loss of rental income to liability claims and unexpected legal expenses. Having appropriate insurance in place can help provide financial protection against specified insured events and risks associated with letting your property.
At 1st Choice Insurance, we can help you explore investment property insurance based on your property, how it is occupied and your individual circumstances. Whether you own a single buy-to-let property or a larger rental portfolio, our team can discuss the available insurance options with you.
Investment property insurance is sometimes referred to as landlord insurance or rental property insurance. The cover available will depend on factors such as the type of property, tenancy arrangement, occupancy, property value and insurer criteria.
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What is Investment Property Insurance?
Investment property insurance is commercial property insurance designed around properties that are owned or let for investment purposes.
A property used as a rental investment can have different insurance requirements from a home occupied by the owner. For example, landlords may need to consider the building itself, landlord-owned contents, liability to tenants and visitors, rental income and the potential costs associated with an insured event.
Depending on your circumstances, investment property insurance can include a combination of:
- Buildings insurance
- Landlord contents insurance
- Property owners’ liability
- Loss of rent cover
- Alternative accommodation
- Accidental damage
- Malicious damage
- Legal expenses
- Emergency assistance
- Employers’ liability, where applicable
- Unoccupied property cover
- Subsidence cover, subject to insurer criteria
Not every policy includes all of these covers, and some may be available as optional extensions. Your policy documents will set out exactly what is covered.
Investment Property Insurance vs Landlord Insurance
The terms investment property insurance and landlord insurance are often used interchangeably, particularly when referring to residential rental properties.
Landlord insurance is generally designed for people who own property and rent it to tenants. Investment property insurance can be a broader term covering properties held primarily as investments, depending on the circumstances.
The type of insurance you need will depend on how your property is used.
For example, different insurance arrangements may be appropriate for:
- Standard buy-to-let properties
- Houses in Multiple Occupation (HMOs)
- Flats and apartments
- Student lets
- Holiday lets
- Short-term rentals
- Serviced accommodation
- Unoccupied properties
- Property portfolios
- Commercial investment properties
What Does Investment Property Insurance Cover?
The cover available will depend on your property, letting arrangements and insurer. Options can include:
Buildings Insurance
Buildings insurance can provide cover for the structure of an insured property following specified events.
Depending on the policy, this may include damage caused by events such as:
- Fire
- Storm
- Flood
- Escape of water
- Theft or attempted theft
- Malicious damage
- Subsidence, where covered
Buildings insurance can cover areas such as walls, roofs, floors, fixtures and permanent fittings, subject to the policy terms.
Landlord Contents Insurance
If you provide furniture, appliances or other contents within your rental property, landlord contents insurance may be appropriate.
This can include items such as:
- Furniture
- Beds
- Sofas
- Tables and chairs
- Landlord-owned appliances
- Curtains and carpets
- Other landlord-owned contents
The exact contents covered and applicable limits will depend on the policy.
Property Owners’ Liability Insurance
Property owners’ liability insurance can provide cover for certain claims made against you if a tenant, visitor or other third party suffers injury or damage to their property in connection with your insured property and you are found legally liable.
For landlords, this can be an important consideration because tenants, contractors and visitors may regularly access the property.
Loss of Rent Cover
If an insured event causes your rental property to become uninhabitable, you may lose rental income while repairs are carried out.
Depending on the policy, loss of rent cover can provide financial protection for certain lost rental income following an insured event.
The amount and period of cover will depend on the policy selected.
Accidental Damage
Accidental damage cover may be available to provide protection against certain unexpected accidental damage to the building or landlord-owned contents.
It is not automatically included within every policy, so check the cover selected.
Malicious Damage
Some landlord policies offer cover for malicious damage caused by tenants or other individuals, subject to the policy terms and any applicable conditions.
This type of cover may be particularly relevant to landlords who rent properties to tenants.
Legal Expenses Insurance
Legal expenses cover may be available to help with certain legal costs associated with specified landlord and property-related disputes.
Depending on the policy, this can include areas such as:
- Possession or eviction proceedings
- Rent recovery
- Certain contractual disputes
- Property disputes
- Employment disputes where applicable
The legal matters covered will depend on the policy wording.
Employers’ Liability Insurance
If you employ people in connection with your property business, such as certain maintenance or cleaning staff, employers’ liability insurance may be required by law, subject to specific exemptions.
Whether you need this cover will depend on your employment arrangements.
Unoccupied Property Cover
A property that is left empty for an extended period can have different insurance requirements from an occupied rental property.
Examples include properties that are:
- Between tenants
- Undergoing renovation
- Awaiting sale
- Newly purchased
- Inherited
- Temporarily vacant
Depending on the circumstances and length of the unoccupied period, an insurer may require specific unoccupied property insurance or impose additional conditions.
Always tell your insurer if your property becomes unoccupied.
Who Needs Investment Property Insurance?
Investment property insurance can be relevant to a range of property owners, including:
- Buy-to-let landlords
- Private landlords
- Portfolio landlords
- First-time landlords
- Property investors
- Owners of multiple rental properties
- Owners of furnished rental properties
- Owners of HMOs
- Student property landlords
- Holiday let owners
- Serviced accommodation providers
- Owners of unoccupied investment properties
The appropriate insurance will depend on the type of property and how it is used.
Buy-to-Let Property Insurance
Buy-to-let insurance is designed around properties that are purchased or held for the purpose of renting them to tenants.
Depending on the property and tenancy arrangement, cover can include buildings, landlord contents, property owners’ liability, loss of rent and other options.
When arranging buy-to-let insurance, insurers may consider factors such as:
- Property type
- Number of bedrooms
- Construction
- Property value
- Number of tenants
- Type of tenancy
- Tenant occupation
- Previous claims
- Property location
- Security arrangements
Providing accurate information about your property and tenants helps insurers assess the risk and determine the terms available.
Landlord Insurance for Property Portfolios
If you own multiple rental properties, portfolio landlord insurance can potentially provide cover for several properties under one insurance arrangement.
Depending on the insurer, a portfolio can include different types of residential property, although restrictions and eligibility criteria can apply.
Portfolio insurance can potentially make managing multiple properties simpler, but the most appropriate arrangement will depend on your circumstances.
Tell us about your full property portfolio when requesting a quotation so that the available options can be considered.
Holiday Let & Short-Term Rental Insurance
Holiday lets and short-term rental properties can have different insurance requirements from properties occupied under a standard residential tenancy.
Frequent changes of occupants, guest use and periods when the property is empty can all affect the risk.
Holiday let insurance or short-term rental insurance may be available depending on how your property is operated.
This can be relevant to:
- Holiday cottages
- Holiday apartments
- Short-term rental properties
- Serviced accommodation
- Properties listed on booking platforms
Tell your insurer how the property is being used so that appropriate cover can be considered.
Benefits of Investment Property Insurance
Having appropriate insurance in place can provide a number of practical benefits for landlords and property investors.
Protection for the Property
Buildings insurance can provide financial protection following specified insured events that cause damage to your investment property.
Protection for Landlord-Owned Contents
If your rental property is furnished or contains landlord-owned appliances and equipment, contents insurance can provide cover for specified insured events.
Protection Against Liability Claims
Property owners’ liability insurance can provide cover for certain claims made against you following injury or property damage connected with your rental property, where you are legally liable.
Support for Lost Rental Income
Loss of rent cover can provide financial protection following certain insured events that make a property uninhabitable and prevent it from being rented.
Options for Different Types of Property
Insurance can be arranged for a range of investment properties, including buy-to-let homes, flats, HMOs, holiday lets and property portfolios, subject to insurer criteria.
Cover for Unoccupied Properties
Specific insurance options may be available where an investment property is unoccupied for an extended period.
Flexible Cover Options
The insurance available can be structured around factors such as your property type, tenancy arrangement, contents, number of properties and other circumstances.
Why Investment Property Insurance Matters
Owning a rental property means taking responsibility for a range of potential risks.
For example, landlords may need to consider the financial impact of:
- Fire damage
- Storm damage
- Escape of water
- Flooding
- Theft
- Malicious damage
- Accidental damage
- Liability claims
- Loss of rental income
- Legal disputes
- Periods of unoccupancy
Insurance cannot prevent these events from occurring, but appropriate cover can provide financial protection against specified insured events and claims.
It is important to review your policy whenever your circumstances change. This could include changing tenants, renovating the property, altering how it is used, adding another property to your portfolio or leaving a property unoccupied.
Frequently Asked Questions about Investment Property Insurance
Do I need landlord insurance for an investment property?
If you rent out a property to tenants, landlord insurance may be more appropriate than standard home insurance.
The insurance you need will depend on how the property is used and your individual circumstances.
Is investment property insurance the same as landlord insurance?
The terms are often used interchangeably when referring to residential rental properties.
Landlord insurance is generally associated with properties let to tenants, while investment property insurance can be used more broadly to describe insurance for properties held as investments.
Do I need insurance if my investment property is empty?
If your property is unoccupied, you should tell your insurer as this can affect your cover.
Depending on how long the property is empty and the circumstances, specific unoccupied property insurance or additional conditions may apply.
Can I insure multiple investment properties under one policy?
Yes, portfolio insurance may be available for landlords with multiple properties, subject to insurer criteria.
Tell us about all the properties in your portfolio when requesting a quotation so the available options can be considered.
Does landlord insurance cover accidental damage by tenants?
This depends on the policy. Accidental damage caused by tenants is not automatically covered by every landlord insurance policy, although additional cover may be available.
Check the policy terms to understand exactly what is included.
Does landlord insurance cover malicious damage by tenants?
Some policies can provide cover for malicious damage caused by tenants, subject to the policy terms, conditions and applicable exclusions.
This cover is not automatically included in every policy.
Does investment property insurance cover loss of rent?
Loss of rent cover may be available following certain insured events that make a rental property uninhabitable.
The amount and duration of cover will depend on the policy selected.
Does landlord insurance cover tenant belongings?
Landlord insurance generally covers the landlord’s property and contents rather than the tenant’s personal belongings.
Tenants are normally responsible for arranging their own contents insurance.
Do I need contents insurance if my rental property is unfurnished?
You may still have landlord-owned fixtures, fittings, appliances or other contents that you want to insure.
Whether contents cover is appropriate will depend on what you provide within the property.
Can I insure a holiday rental as an investment property?
Insurance can be available for holiday lets and short-term rental properties, subject to insurer criteria.
It is important to tell the insurer how frequently the property is occupied and whether it is let to holidaymakers or short-term guests.
Do I need property owners’ liability insurance?
Property owners’ liability insurance is not generally a legal requirement, but it can provide cover for certain claims made against you where you are legally liable for injury or property damage connected with your property.
Do I need employers’ liability insurance as a landlord?
If you employ people in connection with your property business, employers’ liability insurance may be legally required, subject to certain exemptions.
Whether you need it depends on your employment arrangements, so you should seek appropriate advice if you are unsure.
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