home insurances

    When purchasing any type of insurance there are two important things to always remember:
  • Always tell the absolute truth about the property you are taking the policy out on. It can only take one small area of inaccuracy in what the insurance company has been told to invalidate the whole policy. Insurance companies will look at any way of avoiding paying out on a policy and if following a break-in, they find a different type of lock fitted to a door other than the one you have specified this maybe enough to invalidate your policy.
  • You should always read the documents you receive with the policy very carefully. These contain details of what is and what is not covered as part of the policy. When these are first received, they should be examined carefully to ensure the cover they offer is suitable for your needs. It will be too late to change anything once an accident has happened and you find you are not covered against this particular risk.
  • To ensure you get a policy suitable for your requirements it may be preferable to use the services of an insurance broker who can find a policy to ensure you are properly insured against your particular/unique type of risk.

    Buildings Insurance

  • Buildings insurance is a form of cover that only covers the structure of the building and not the contents inside. It is not a legal requirement but to take the risk of not having buildings insurance is one not worth taking. If you have a loan against the property, then having insurance will be a condition of having the loan. If you own the property, you will still want insurance as if the property is destroyed, you will be left with nothing.
  • If you have a property such as a flat in a block this maybe covered by a block insurance policy and will be paid for as part of a service charge. Policy details will be received each year at the same time that the demand for the service charge is received. If you have a mortgage, then your lender will require a copy of the policy.
  • When taking out insurance the “rebuild cost” of the property needs to be known. This cost can be either lower or higher than the market value. It’s vital that this cost is correct otherwise you could be paying insurance costs that are too high or will be under insured. If the property has been recently valued, then the valuation will show the rebuild cost. If not, then the Association of British Insurers has a free on-line calculator available.
  • The most basic insurance is Fire, Lightning, Explosion and Aircraft (FLEA) which covers what it says. If you take this out, then you should at least add additional cover for escape of water and leak detection as these risks can prove expensive to rectify without insurance. It’s always best to take out the best cover you can afford rather than skimp on a policy that doesn’t give you the cover you really require. If you take out a specific landlord’s insurance, then this will often include a limited amount of contents insurance.
  • Obviously, you should tell the insurer that the property is being rented out as this can be overlooked. It is also important to tell the insurer what type of tenant will be in the property as tenants on benefits and multiple occupancy will affect the cost.
  • Different insurers treat empty properties differently and this should be considered when taking out a policy. Some don’t require to be told when a property is empty between rents whilst others do. Some require maintenance to be carried out when the property is empty.

    Landlord Contents Insurance

  • Building insurance only covers the structure of the building so anything in the property that can be taken away such as carpets, curtains and kitchen unit requires contents insurance. Even unfurnished properties will likely have carpets and kitchen appliances so contents insurance would still be appropriate. A decision on purchasing contents insurance depends on how much it would cost to replace the contents against the cost of insurance. Tenants should be aware that this insurance doesn’t cover their belongings in the property, and they should take out their own cover to protect these. This is another good reason to keep an accurate inventory. Malicious damage insurance should also be considered to protect the property against damage by tenants.

    Public Liability Insurance

  • This covers your tenants from any ill that may befall them whilst occupying the property and anyone visiting the property. This is a must have as liability claims for personal injury can easily exceed £1m in the worst cases. Landlord insurance often includes public liability insurance as part of the cover, but it is worth checking that this is the case and that the level of cover is adequate for your property. Insurers will look to find reasons not to pay out on liability claims so ensure that any claim is accurate and that you are following all relevant legislation to the letter.

    Rent Guarantee Insurance (RGI)

  • The basic premise of this is that the insurer will take over payments if the tenant defaults on their rent. A drawback is that the payments may only come after a couple of months in arrears and the claims process can take some time to complete. Also, the insurers can be fussy about the type of tenants that they will cover – they may only take those that are most likely not to default thus making the policy an unnecessary cost. It may be cheaper not to take the risk of the odd default and save the RGI premiums. But if you can afford it, it’s probably worth taking out a policy as it drastically reduces the amount of time you could be out of pocket.