Get the Right Landlord Property Insurance

by Angus Ryan

9:38 AM, 8th February 2012
About 9 years ago

Get the Right Landlord Property Insurance

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Get the Right Landlord Property Insurance

Buildings insurance for a property is generally the responsibility of the owner or landlord. Tenants must still take out contents insurance to cover their possessions if they want to be protected against theft or fire damage, though for example. This is even more relevant in a House in Multiple Occupation letting to students or professionals.

If you are a landlord renting out a furnished property including HMO’s you will be well advised to take out contents insurance to cover your own belongings, personally, I usually take out £10,000 for the contents of a furnished HMO. I will also consider taking out some contents insurance for self contained units in not so desirable areas where there is a higher risk of malicious damage by the tenant or a break in.

You need to purchase proper landlords property insurance with Public Liability (in case your tenant is injured in the property) and Employers Liability (in case an employee gets injured in your property), Loss of Rent and malicious damage. It is vital to check that your policy covers malicious damage by the tenant as this has saved my bacon on several occasions with several of my properties in not so good residential areas. I would also recommend that you take out Legal Expenses cover in case of a tenant dispute, say a tenant is trying to sue you over an alleged house disrepair, contract dispute or repossession you’re covered. Your legal protection policy will also recover rent arrears where possible e.g. where an ex-tenant is absent but there is a guarantor.

I had one rather unfortunate experience when a tenant sued me for disrepair in connection with a flooding insurance claim. I had to employ a solicitor to defend my case which cost me hundreds of pounds in costs and damages to the tenant as it was not economical to defend the case all the way to a court hearing even though I was not entirely at fault. Solicitors are notoriously expensive and so taking out legal cover for about £70-80 per annum is a real MUST.

One of the quickest ways to save pennies is to switch your insurance deals. Whether you have building and contents cover or a special landlord insurance policy, chances are you could find a deal that is not only cheaper, but provides better cover. For example last year I saved almost £800 by switching and it was better cover! The market is constantly changing so an annual review of all your insurance products could really pay off – just make sure you check your policy details rather than choosing on price alone. A cheap policy is worthless if it doesn’t pay out when you make a claim. Some insurers will include property emergency cover with their main policy which is a useful add on.


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Comments

matchmade

9:25 AM, 9th February 2012
About 9 years ago

Do you have any thoughts on which firms are the best-value providers in the market? It would be useful to compare notes on landlords' experience of costs and quality of service.

9:26 AM, 9th February 2012
About 9 years ago

I tend to have separate policies for each of my properties. I would be interested to know if other landlords purchase blanket policies, if they are available, and if so is it more cost effective?

Mark Alexander

9:54 AM, 9th February 2012
About 9 years ago

Hi Gary, I have a share in a block policy and it saves me £1,000's. For more info speak to Paul Baudinet on 01603 428588.

matchmade

10:14 AM, 9th February 2012
About 9 years ago

I buy single policies for my houses but appear to save by buying them at the same time through Total Landlord Insurance (HFIS), who also give reductions to NLA members.

I also used Total Landlord recently for a small block policy (4 apartments, rebuild cost £330K) and was pleasantly surprised by the cost of about £400. I built the flats last year and have been administering the management company on behalf of the new leaseholders until they get settled in.

15:45 PM, 9th February 2012
About 9 years ago

 A  mistake I have come across is landlords concealing historic claims.
All insurers will have access to prior claims history so the rule is to
be completely honest as they will find the information and it may
invalidate your future claims if you have not been honest up front.

Insurers may take a dim view of repeated small water damage claims as
this suggests poor maintenance whereas a burnt out shell might be
considered a one off, your premiums will be set according to the level
of risk you represent.

The other thing to watch out for is the vacant period covered between
lettings. This can be as little as 30 days which, if you have student
tenants, may mean your property is not adequately covered during the
long summer.

The other way some landlords can negotiate their premiums is on the
level of excess they require. If you handle repairs yourself rather than
make lots of small claims then make sure you reap the rewards for this
by requesting a higher level of excess.

And of course if you want recommendations you can always check the Property118 directory for testimonials!

22:16 PM, 9th February 2012
About 9 years ago

I have occasion to to make numerous claims for floodings; all of which occured whilst the flats were vacant; undergoing viewing.
It cost the buildings insurance company over £50000.00
None of these floodings were my fault.
It was down to the incompetent builders.
It nearly cost me one of the flats as it took over 6 months to repair; it was flooded with sewage in the summer and the useless insurance company ; loss adjusters and managing agents did nothing to sort it out quickly; you can imagine the stink as raw sewage gradually filled the flat up causing even more damage then when first notified to the insurance company.
The only way I managed to pay the mortgage was a credit card.
There appears to be NO insurance policy that will cover a property whilst it is inbetween tenants.
The chances of a property suffering loss of amenity whilst it is vacant;  is of course most unlikely, but it has happened to me 4 times now!
Consequently I wanted to arrange contents and malicious   damage insurance  by tenants.
I was advised that the fact that I had claims even though none of my fault meant that I would have to leave it for about 5 years before I could consider obtaining sensible quotes for such contents insurance.
This means I am now exposed for the next 5 years to any tenant theft or damage at my flats.
How can that be fair?
It appears that there is no insurance provision for the situation I now find myself in, nor particularly for any time my properties are vacant whilst undergoing viewing.
This means I am continually vulnerable to losing my property because I do not have a current tenant.
Not that this could mean much as my AST states that a tenant may surrender the tenancy if there is a los of amenity for 1 month.
It would appear that one has to have to have a AST in force whether they have moved in or not.
So perhaps to ensure I am covered I will by magic always have in force a AST!
This will ensure that the insurance will pay out to the tenant for where he may choose to reside which funnily enough will be as a sharer in a house and the monthly rent will always be enough to meet my monthly mortgage payment.
How many landlords realise they are exposed to losing their property if they cannot sustain mortgage payments whilst a property is being repaired.
If I have such a situation again and the'tenant' decides to give up the tenancy I am stuffed.
I would be unable to make the mortgage payments and the mortgage company would have a potential wreck on their hands with no possibility of recovery from me as I am effectively bankrupt.
Is it not beyond the wit of the UK insurance industry to come up with a policy to cover a situation which EVERY landlord faces and that is cover whilst a property is vacant and undergoing viewings?
It would make fantastic business.
How many LL would hav e to make such a claim.
It surely would be such a rare event.
The risk is not having any insurance and no tenant occupying or an AST in force leaves the LL exposed weith no cover to pay the mortgage whilst the property is being repaired.
Taken to the enth degree; let us say the property falls down in between tenants and undergiong viewing.
It could take over 1 year to rebuild.
Who pays the mortgage?
Ans nobody, which will mean the property or rather the hole in the ground will be repossessed.
This could mean the LL could be bankrupted in extremis.
How many LL realise how exposed they are to this situation.
I have enquired across major industry providers.
None of them has a solution to cover these circumstances.
So I fully appreciate you should have proper landlords property insurance.
The only problem you cannot obtain it anywhere!
There is also an issue with insurance provision if you have flats.
You generally have to have the block insurance policy paid for in the service charges.
This excludes you from some proper landlord proerty insrance as it is illegal to have 2 buildings insurance on the same properety and it is required with most insurance add-ons that you have a buildings policy with the same company!!
Anybody got any ideas for my parlous position.
I have to say that apart from a bathroom towel  radiator having rusted through due to the criminal fraud of the origianal builders in not putting in the right fluids in the C/H system 2 weeks ago I have not experienced any other problems with the flat!!!

Mark Weedon

11:41 AM, 13th February 2012
About 9 years ago

Paul

What you need is a broker who is experienced in these matters.

It does not matter if the claim is your fault it is still a claim and the insurers have made a payment.

What should have happened with your claim is an interim payment for loss of rent whilst the repair was being carried out.

I'm sure you can find the cover you need albeit at an increased premium.

18:09 PM, 13th February 2012
About 9 years ago

Yes the claim situation is unfair but a reality.
It means that incompetent builders leave the property purchaser with the insurance claims which then damage the premium amounts that the purchaser has to pay in later years.
In my case I had no insurance apart from buildings insurance and because there was no tenant the insurance company didn't have to pay out for rent for alternative  accommodation.
From now on I will always have a signed AST even if there is no tenant so I can claim for alternative accommodation for the 'tenant'; that's what friends are for!
There is not one insurance company in the UK that offers insurance for when properties are vacant inbetween tenants.
Indeed I would challenge you to find such a policy.
There isn't one so perhaps you might, using your good offices be able to generate some interest with insurers to facilitate such an insurance policy.
EVERY landlord is exposed to this risk.
I quote an extreme example
A landlord has 4 ground floor flats in Worcester,( an area subject to extreme flooding),
They all become vacant folowing tenants leaving.
All 4 flats become flooded at the same time following a major flooding event.
The buildings insurance covers the rebuild
Contents insurance covers the damage to items not covered by the buildings insurance.
There being no incumbent tenant and no AST for a tenant due to move in.
Who pays the mortgage on all 4 flats in the meantime
Ans Nobody
Taking into account it could be more than a year for a place to dry out and be repaired.
If these circumstances occurred the LL would most probably be bankrupted.
This would not occur if there was an insurance policy to cover this highly unlikely situation;  but one that is vital for the risk that the LL is exposed to.
I would willingly pay £50.00 per year per property for this very rare risk.
It has happened to me 4 times now;  this very rare eventuality!!?
I am most likely not going to be in this position,  as I now have long term tenants; however I would still pay say £50 per property just incase, as the tenant could surrender the tenancy if the property wasn't available for 1 month.
There is no cover of the type I am after even though every LL could face the same issues I have.

BobG

10:07 AM, 18th February 2012
About 9 years ago

HI 
Last year I had my first claim in 30 years due to a fire in the loft space of a property, caused by an electrical fault.  It was quickly put out by the fire services thanks to prompt action by the tenant.  Looking at the property from the outside you would not know there had been a fire but there was £50 000 worth of damage.  I am just completing the refurbishment which involved new roof (structure and covering, rewire, new ceilings and plastering throughout etc.  Anyone who would like to have a look please let me know.  The property is in Solihull.My point of this posting is to ask everyone to make sure they have a regular electrical inspection of their properties.  I know the gas certificate is a legal requirement but an annual electrical inspection is not and so sometimes gets forgotten.  A "regular" inspection is recommended which usually means every 5 years.  Also don't think that an RCD (residual current device) on the fuseboard will trip before a fire starts as certain types of fault still occur, and can cause a fire.I am a chartered building surveyor with part P and 17th Edition electrical quals, so I understand buildings and electrics but I still always use an NICEIC electrician or equivalent for any work.  Lofts particularly get overlooked and new insulation regs  mean ever thicker insulation can add to overheating problems particularly on older wiring.  Also storing items in the loft can dislodge electrical connections. So don't ignore the electrics, always get a regular inspection carried out, upgrade your fuseboards even if is does incur a significant cost and always, but always, use a qualified electrician to do alteration no matter how small.  Best WishesBob Grant07740492887Robert Grant B.Sc(Hons) M.Sc MRICS MCIOB

Mark Alexander

10:20 AM, 18th February 2012
About 9 years ago

Hi Bob

Thanks for sharing your story. One of our regular posters here (Paul Barrett) is ex-fire services and has shared some useful tips on fire prevention in his comments too.

Presumably the claim wasn't just for fire damage but also for re-housing your tenant? Were the insurance company helpful with this?

I wish you well with getting it sorted, I've not had to deal with fire damage yet (touch wood) but I have had to deal with flooding so I know the upheaval these things can cause.

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