Property insurance – Change of tenant circumstance?

by Readers Question

4 weeks ago

Property insurance – Change of tenant circumstance?

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Property insurance – Change of tenant circumstance?

I am just in the process of renewing my property insurance. I have three cottages in a terrace, all identical and the renewal cost is £110.00 each.

However in my discussion with the broker he asked me if all the tenants were still working. I told him that one tenant was now retired so he said in that case the cost would increase to £117.00. When I questioned this he explains that every time a tenants circumstances change I should inform the insurance company.

I must admit that each time I renew I am asked about the tenants circumstances, but never gave it much thought. I then asked if one of the tenant lost his job and had to claim benefits what would be the extra cost, it then becomes even more complicated.

He said if the council pay the tenant then the tenant pays me the cost would be £127.00, but if the council pay me direct then the cost would be £215.00 to be adjusted pro-rata, also a refund would be given if circumstances changed the other way.

When I explained that some tenants lose their job and don’t tell the landlord, but claim benefit where does that leave me if there is an incident, he said if you definitely didn’t know you MAY be ok.

This got me thinking of all sorts of scenarios like if the tenant loses his job, claims benefit then finds another job a few week later I would need to inform the insurers each time.

I only have a small portfolio, but it must be a nightmare for people with lots of properties. In thirty years of being a landlord I have never come across this before.

Jack



Comments

Neil Patterson

4 weeks ago

Hi Jack,

I will ask our own Landlord Insurance partner and experts Jason or Tom to comment on your question for us 🙂

Jason McClean

4 weeks ago

Hi Jack,

Tenant type is a major rating factor and determines price to a large degree. You should tell your insurance company every time the tenant type changes.

DSS is riskier and more expensive than working tenants. If the Council or Authority pays you directly, that is even riskier.

Getting insurance for asylum seekers is close to impossible and will cost fortunes.

But if you do not disclose the correct tenant type and ever need to make a claim, you could have the claim refused.

Your prices don't sound bad, but if you want us to review the portfolio, do visit http://www.thehomeinsurer.co.uk and we will see if we can save you any money.

Best

Jason

Kate Mellor

3 weeks ago

Are we talking about buildings insurance here, or rent guarantee?

Jason McClean

3 weeks ago

Hi Kate

Both - if there is a change of tenant, you need to let your buildings/contents insurer know. If you don't then any future claim could be refused. It is very serious.

In terms of rent guarantee insurance, as long as the new tenant meets all referencing requirements, then you should be fine, but good practice to advise the insurer with new names etc.

Hope this helps.

Jason

Smithy @hotmail

3 weeks ago

When you notify a change of tenant-type, there is a charge. So when my excellent tenant lost his job (manager at Toys-r-Us), not only did he become unemployed - so higher premium - but there would also be a charge for amending the policy. This is buildings insurance - not rent protection. The risk to the property itself did not change.

In the example quoted in the original post, the tenant became retired. I cannot see why that would make the risk to the property any greater than it was a year ago when he/she was under retirement age. I would have thought that older people are generally more careful - so the price should go down!

Old Mrs Landlord

3 weeks ago

Reply to the comment left by Smithy @hotmail at 03/06/2018 - 02:27
Smithy, I think it's something to do with their being at home most of the day, using more appliances etc. which has been shown to increase fire and other risks. Whatever the reason you may be sure there is one and it's based on analysis of claims experience.

Jason McClean

3 weeks ago

Yes, change of tenant circumstance should be noted as risk will change. If you don't notify the insurer and then have a claim, be prepared for it to be rejected.

We don't charge for mid term adjustments - no fees - just whatever change in risk premium will be passed on. Read the small print on your quotes before buying to see if you are charged for mid term adjustments. Low cost policies will normally always have high mid term adjustment fees - they will try to make their money that way.

Smithy @hotmail

2 weeks ago

Why does the risk change when my tenant becomes unemployed? Through absolutely no fault of his own.
(Buildings insurance not rent protection.)


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