Is it time for your landlord insurance review?

If you ask when might be the time for a landlord insurance review, the answer is likely to be summed up in just one word – regularly. Not only might your circumstances and those of your buy to let property change, so too might the range of different insurance options available to you in the market.

When you arranged your insurance it was likely to have been to protect your investment in the buy to let property you bought, the contents you installed in it and the obligations and responsibilities you took on as a landlord. So, what might have changed?

Your property

A core component of your cover is typically the buildings insurance to protect the structure and fabric of the property itself against such major perils as fire, flooding, storm damage, impacts and falling objects. It is important that the total sum insured under this heading is sufficient to completely rebuild the premises in the event of a major disaster.

The reason for a regular landlord insurance review, therefore, is to ensure that the valuation of the property, together with its current estimated rebuilding cost, is kept thoroughly up to date. If reconstruction costs have risen and you remain under-insured, of course, you may find it impossible to replace your investment.

Your contents

Similarly, time is unlikely to have stood still when it comes to any equipment, furniture, furnishings or fittings you have installed in your letting. However careful you might have been when first drawing up an inventory of the contents you owned, this may become increasingly obsolete as new items are added or old ones replaced.

A regular landlord insurance review may help you to ensure that all of the contents remain adequately insured and in a position to replace any items lost or damaged under the insured risks.

Your business

There might also have been changes that reflect more subtly on your buy to let landlord insurance.

Perhaps your tenants are now more regularly drawn from a population of students, benefits claimants, or new arrivals to the UK, for example. You may wish to review whether your insurance continues to accept tenancies from these groups of potential customers.

You might have become more worried about the risk of malicious damage caused to your property by your tenants. Did you know that some buy to let landlord insurance policies include cover for such malicious damage as a standard feature? It may be reason enough for you to change insurers.

If you anticipate gaps of over 30 days (or 45 days with some insurance providers) between tenant handovers, when the property is going to be standing empty, you may wish to consider the safeguard of unoccupied insurance.

If your buy to let business is flourishing and you have come to depend on the income it generates, you might want to ensure that your current insurance offers an element of compensation for lost rental income in the event of one of the insured risks making the premises temporarily untenantable. Although there are likely to be limits to the amount of compensation you may be able to claim, a landlord insurance review might reveal that some policies include such protection as standard.

The importance of house insurance

House insurance may be all that stands between you and financial ruin in the event that you suffer a major property problem.

The cover

A typical house insurance policy provides cover for:

• the buildings – against things such as fires and storms etc;
• the contents – covering similar risks but also typically things such as theft and perhaps accidental breakages etc.

In some cases, you may be unable to obtain a mortgage unless you can show that you have full property insurance cover in place.

Special cases

You will typically need a slightly different policy (or policies) if you:

• use your property in full or part for rental purposes;
• leave your property unoccupied (this applies to both owner-occupiers and landlords insurance and unoccupied is typically considered to be more than 30 consecutive days, so empty property insurance cover will be required).

There may be significant differences in terms of breadth of cover between policies and providers.

Other considerations

Remember that the maximum insurance value for your property may need to take into account the full rebuild value after a disaster.

That may be considerably more or less than either the price you originally paid for it or your views of its market value.

It may be a good idea to obtain professional advice about the rebuild value to be used for your house insurance.

Top tips - house insurance

There’s an old insurance tale of a couple standing in the street surveying the smouldering ruins of their burned-out house when one was heard to ask the other whether or not they had house insurance.

True or not, immediately after a disaster to your property is not the time to start wondering whether you have the right sort of house insurance!

Here are a few tips to keep in mind.

1. Don’t underestimate your home buildings cover

If your property is very severely damaged or completely destroyed, the cost of complete re-building may be staggeringly high.

Don’t forget to also allow for architects’ and surveyors fees etc.

Keep in mind that if there are any shortfalls between the insurance cover and the actual costs incurred, it will be your pocket that has to meet the difference.

2. Don’t underestimate your contents values

Similarly to the above, be realistic about how much it would take to replace your prized possessions and furnishings etc.

Make a list systematically room-by-room then add up the values. Include even the smaller value items things such as CDs etc – even these can all add up!

Don’t be temped to estimate low because it may reduce your insurance costs slightly – that may be financially very painful in the event of a fire or burglary etc.

3. Watch out for new-for-old or market value contents

Some house insurance may offer you the choice between the above two forms of cover. Some may simply tell you what their policy is.

There’s no right or wrong here – it depends upon your perceptions of your possessions and their value but be cautious regarding market value policies as they may not allow you to easily replace your contents without finding significant extra sums yourself.

4. Think about third party damage/injury

If your property partly collapsed and damaged another in the process or injured someone, then depending upon the circumstances, you may have significant financial liability.

Make sure that somewhere in your house cover portfolio, you have a public liability policy or clause that provides adequate protection against this type of claim.

5. Landlords – think differently!
If you’re planning to rent out your property, you will need special buy to let insurance.

Any existing owner-occupier home and buildings insurance cover you have will typically become immediately invalid and will need to be replaced or supplemented by cover that protects your property in the context of commercial use.

House insurance is typically available from a number of sources , so why not go online to find a suitable deal?

A Simple Way to Protect Your Business and Your Investment: Landlord’s Insurance

Being a landlord is perhaps not as easy as is sometimes made out. There are actually quite a few things that can go wrong with your property business (or hobby!). These range from the catastrophic (e.g. a property that you own being destroyed in a fire or flood) to the more mundane (e.g. tenants not paying their rent in time). It is obviously not possible to totally avoid risks like these. It is possible however to cushion yourself against them (and several other kinds of risks not mentioned above) by taking out adequate landlord’s insurance.

Very few new landlords (and sadly even some established ones as well!) realise that there are insurance products available that cater specifically for landlords. This means that they often try to put together a ‘do-it-yourself’ insurance portfolio (covering different aspects of their business) as best as they can. The unfortunate result of this is that many landlords are underinsured or have significant ‘holes’ in their cover. This is totally unnecessary!

The growth of buy-to-let investments over the past few decades was met by the insurance industry with the development of a vast array of packages aimed specifically at the needs of landlords. The details of the different policies that are available obviously vary a great deal. In general however landlords insurance policies will normally cover the following contingencies:

• Loss of, or damage to, buildings and/or contents
• The provision of an alternative place to stay for tenants following damage to an insured property.
• Cover for the loss of income (usually for a period of up to 12 months) in case of damage to a property.
• Liability cover. This offers protection from possible claims by tenants and/or by contractors working on a property on your behalf.
• Cover for unoccupied properties (e.g. when a property is ‘between tenants’) - a special policy called unoccupied property insurance may be required.

The above list should make it clear that landlord insurance has the potential to protect you against some of the most common types of adverse event that could potentially threaten the health of your property business. Getting sufficient cover should therefore be quite high on the ‘to-do list’ of landlords. Some of the things that should be kept in mind when selecting a policy are:

• Premiums for exactly the same cover can vary quite significantly between different insurance companies. It is therefore important to ‘shop around’ in order to get the best possible deal.
• Even though price is an important consideration it is certainly not the only thing to keep in mind when choosing a policy. Things like the reputation and strength of the insurance company and possible exclusions can also have a bearing on which policy to choose.
• When choosing insurance it is always important to try your best to strike the perfect balance between being adequately covered and paying for levels of cover (or services) that you do not need.
• Landlord insurance policies can sometimes be quite complex and it could therefore sometimes be necessary to submit a policy document to a legal professional in order to make sure that you will be sufficiently covered if you take out a particular policy.

Most people do not like paying for insurance as it deals with heavily with “what if’s” the fact is however that having proper insurance in place can often mean the difference between succeeding as a landlord or leaving the field early due to an inability to move through unexpected difficult circumstances.

Summary:

• Landlord’s Insurance can provide cover against some of the most common contingencies faced by landlords
• Cover can range from major incidents (e.g. fire or flood) to something as ‘mundane’ as tenants not meeting their payments
• It is very important to shop around in order to get the most suitable cover at a realistic price
• Complex landlord policies should ideally be checked by a legal professional

Student possessions insurance

Students and insurance are two words you do not often find together in the same sentence. Whether they have their own room in halls of residence or share a house with others, there’s a sense of their living a life that is different to many other people. Student possessions insurance takes into account some of those differences, reflecting both the risks and the financial needs and circumstances of students.

One thing remains the same, though. Even students are likely to have more possessions – and more valuable possessions – than they might initially realise. Laptops and computers, DVD collections, sound systems, textbooks, all can add up to a very tidy sum, that can represent a great deal of money if they need to be replaced after they have gone missing or been damaged. Although insurance is unlikely to be uppermost in many a young person’s mind when they set off for university or college, therefore, student possessions insurance can save a great deal of expensive heartache further into the term.

The most straight forward and probably the cheapest form of cover is likely to be offered when the possessions are kept all together in the student’s own room, such as the one in halls of residence. In this case the insurance usually covers just the possessions actually kept in the room and is likely to cost just a few pounds a month.

Many students, of course, do not live on campus, but share a house with fellow students or others. Cover here can be slightly more complicated or more difficult to arrange because of the assessed risks by certain insurers. If the house is shared, for example, there could be a greater risk of theft, not only by dishonest flat-mates but also by their many friends and visitors in turn. For this reason, some insurance policies will restrict cover for loss that occurs only in the event of a forced entry to the premises and would not cover theft that seems to have been committed by other housemates or their guests and visitors.

Since such students will probably be renting the house from a landlord, some might think that the landlord will take care of the insurance. Although the landlord is, indeed, likely to have landlord insurance that covers risks to the building itself from such things as floods and fire, it remains the tenants’ responsibility to insure their possessions against any damage caused in such emergencies. Student possessions insurance, therefore, should provide enough cover for the replacement of possessions in the event of damage by fire, flooding and other such perils.

Where accommodation is shared, therefore, a perfectly viable solution might lie in insuring valuable possessions separately, under their own policies. Thus, a computer or laptop, personal sound systems, books or a bike could all be insured entirely separately. One of the advantages to this approach to student possessions insurance is that items – such as laptops – taken away from the house, for use anywhere within the UK, will continue to be fully covered.