Boiler Cover – Is It Worth It?
Should I spend out on landlord boiler cover insurance? This has been a question that has preoccupied me for several years. By instinct I don’t like shelling money out and not getting anything back in return. However, several boiler failures in quick succession have reminded me of what an expensive business boilers and employing plumbers can be. The other issue for landlords to remember is that it is not just the cost of employing a plumber, especially a London plumber, it’s also getting hold of one at this time of year.
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Should a landlord replace their old boiler?
The dilemma I recently faced as a landlord was that both boilers were in their twilight years, 10 years old. Not old enough to give up on and still legal according to the most recent Gas Safety Certificate (CP12). Most decent boilers should last about 15 years; but old enough for the parts and the technology to be a little out of date and for the fault to be difficult to find. Remember it’s always worth getting your plumber to phone the boiler company’s technical department if they need expert technical help on isolating the exact nature of a difficult to isolate problem. However, as landlords we all know that all this is extra time and more money on the bill.
How long will a boiler last before it needs repair?
Consumer organisation Which has recently looked at how long a boiler will go without needing some kind of repair. The answer. Within the first six years 49% of boilers developed a fault of some description and the average cost of repairing a boiler fault was £188. In the past I’ve tended to purchase Worcester Bosch boilers as these have served me well and have had a good reputation within the industry. The latest Which report bares this out in that their figures indicate that only 38% of Worcester boilers developed a fault in the first 6 years. The most common faults on a boiler during the early years based on a recent Which survey of almost 5,000 members were:
1. Water leaking from the boiler
2. Boiler keeps switching itself off
3. Problems with built in controls of the boiler
4. Control panel error on the boiler could not be reset
5 Water leaking from the condensate pipe
What is boiler insurance or a boiler service contract?
Boiler insurance or a boiler servicing contract is a policy which involves monthly or annual payment that guarantees the costs of repair should the boiler break under cover. There are a number of companies that now provide this specialist cover for landlords. Conditions and restrictions for each contract vary so it’s important to look at the details. The typical restriction is boiler insurance may not be available if your boiler is over a certain age so for a conventional boiler this may be 15 years but only 7 years for a condensing boiler (what does this say about the reliability of modern condensing boilers?) Other policies specifically exclude cover in certain types of building such as apartments in a block so it’s worth thumbing through the small print.
Many of the landlord boiler insurance companies will bundle their cover to include additional services such as a gas safety report. They also promise to replace the boiler if they are unable to fix the boiler or find the part. The exclusion to this promise is it only applies to relatively new boilers eg ones of less than 7 years of age.
There are two essential factors when deciding whether to get boiler insurance. Firstly the costs of repairing their boiler should it go wrong and secondly the hassle / convenience of trying to locate and employ an engineer to fix the problem.
Why do landlords opt for boiler insurance?
Latest statistics indicate that overwhelmingly people opt for boiler insurance to give them peace of mind (63%). Some will opt for it because of the fact it includes an annual service (55%). Interestingly, 67% of those who have breakdown cover did not need a repair visit outside of the annual service. This means they could be paying for an overpriced service. Should a landlord buy boiler insurance?
For many landlords one of the hardest problems in resolving boiler and plumbing problems is actually getting the plumber to the buy-to-let property in the first place. With freezing weather, plumbers start to get inundated with burst pipes and other emergencies that mean even when a landlord has made careful arrangements, these may have to be cancelled at the last minute because another customers ceiling is just about to collapse under a weight of water. All ‘lordable stuff’ but when your tenant hasn’t had heating or hot water for several days; then rightly the tenant doesn’t care about the noble actions of your plumber – they want and expect their heating to be fixed. This is where the insurance schemes do offer something useful. Homeserve offer 24/7 coverage 365 days a year and say that they can get somebody to you in 2 hours in a real emergency. This is a relief especially when unfortunately boilers and leaks don’t seem to differentiate between holidays and other days when deciding to break down.
Statistically, landlords maybe better off without boiler insurance according to a recent Which survey. Infact, 93% of those without cover would be at least £50 better off then even with the cheapest cover. However, the unlucky ones mean that 3% of landlords would be £100 better off paying for insurance. If a landlord has an older or unreliable boiler then landlords may be better off with a policy even though 82% will be at least £50 better off statistically. As always these figures don’t factor in the worry or inconvenience factor of having to sort our and organise the repairs.
What to look out for in choosing a boiler insurance policy?
If you do consider using a policy such as the Samuels do as mentioned in the article on student letting tips have done then what should a landlord look out for?
1. First, landlords should check if there is a cap on call outs. Some cheaper policies limit the number of times that a landlord uses them in a year.
2. Landlords should find out how much parts and labour is actually covered. Whilst it’s OK to have free labour for an hour, most plumbing and boiler jobs take over an hour to do, so it’s better to opt for a policy that has an unlimited amount of labour included as standard.
3. Once repairs are done, a landlord should check if they are guaranteed and if so, for how long.
4. What’s the call out window? Will you the landlord (or your tenants) have to wait in all day or is the booking slot narrower? Powergen now E.ON says it offers a two hour time slot but most providers only operate on AM or PM and AM often means 8AM-2PM!
5. A landlord should check whether their specific boiler is covered. Some policies won’t cover boilers over a certain age and few cover anything which is over 15 years old. Other polices won’t cover certain models.
6. How quickly can the plumbers come out? Cover Heat say they can get someone to a landlord’s buy-to-let property in 24 hours or 2 hours in a real emergency. However, what happens if that service promise is broken?
7. Is there an excess – i.e. do you the landlord have to pay the first X pounds of any call out?
8. Finally what’s the cost? British Gas charges £290 a year for Home Care 200 but Valliant Boiler’s own cover is £168 and has no annual limits on call outs.
Which is the best boiler insurance for landlords?
The Which survey of boiler insurance concludes that the cover a landlord gets with their local boiler installation company is the best for customer satisfaction so don’t exclude your local family heating engineering or plumbing business. If a landlord does plumb for a national company then to go for a service contract with the actual boiler company gives the greatest customer satisfaction. The annual £188 Worcester contract delivers an 80% customer satisfaction rating. The top general insurer policy is SSE or British Gas with a 62% rating. Scottish Power (HomeComfort) returned the lowest score of 42%.
How can landlords get a plumber?
For many landlords including myself one of the hardest problems in resolving boiler and plumbing problems is actually getting the plumber to the buy-to-let property in the first place. With the freezing weather having now arrived, plumbers start to get inundated with burst pipes and other emergencies that mean even when a landlord has made careful arrangements, these may have to be cancelled at the last minute because another customers ceiling is just about to collapse under a weight of water. All ‘lordable stuff’ but when your tenant hasn’t had heating or hot water for several days; then rightly the tenant doesn’t care about the noble actions of your plumber – they want and expect their heating to be fixed. This is where the insurance schemes do offer something useful. Some such as Homeserve offer 24/7 coverage 365 days a year and say that they can get somebody to you in 2 hours in a real emergency. This is a relief especially when unfortunately boilers and leaks don’t seem to differentiate between holidays and other days when deciding to break down. If you do need to call out a plumber how much should a landlord pay?
Bad press for boiler insurance policies
Boiler insurance does give some reassurance over the cost of repair of a landlord’s boiler, but there are lots of exclusions on what’s covered, so landlords should read the small print of the policy carefully. There have been instances when the service provider was found out during cold periods when claims have been high. For example, in 2005, the Guardian newspaper received numerous complaints from readers about British Gas’s service. There were cases of missed appointments including also examples of engineers sneaking up to houses and putting notes through letter boxes saying they had called then they hadn’t. British Gas says its problems are behind it but it did not fare too well in USwitch’s recent customer satisfaction index.
Another criticism that’s been made is that given the low cost of these services, providers are over-keen to bump up profits. There have been stories of rogue engineers working for one of these providers who will say a boiler cannot be repaired because the part is no longer available. This allows him to then sell in and install a new boiler and make a good profit. However, some customers who have sought a second opinion from their local trader have found that the part is readily available after all.
When should a landlord get boiler insurance?
In deciding whether to take out a policy a landlord should consider what their time commitments are. For instance for somebody like myself who is self employed then I have the flexibility of being able to phone round and arrange a plumber. For those landlords who do not have this luxury, insurance offers some benefits. Likewise if you are a landlord with a an older boiler, who is on a tight budget, then having the certainty that you are not going to be hit with a repair bill of £200-300 is an attractive reason to take out cover.
Finally, where a landlord doesn’t have a regular, reliable and cheap plumber, finding one that isn’t going to rip you off isn’t easy. Emergency plumbing rates and call out charges will quickly rack up a large bill and that is before any parts have been purchased. For example the PCB board I had to purchase to fix one of my boilers was over £150. For those in London a quick check on Pimlico Plumbers weekend rates for heating services showed an hourly day rate of £200.
My recent experiences of boilers
I’ve had a situation recently where two boilers were playing up. As is the case with many mechanical devices; boilers rarely break straight off. There is normally an annoying catalogue of minor intermittent faults, before the final phone call from the tenant announcing that:
“Nothing at all works now!”
This is when a landlord starts anxiously flicking through their phone or contact book looking for the details of their plumber and praying that they haven’t changed phones, or died as happened to me once. The next stage is the pleading; as the landlord attempts to advance a convincing argument of why their tenant’s needs are greater than anybody elses, in the hope that they can get the job higher up the priority list.
The other unenviable alternative is to go on the hunt for a competent heating engineer by trawling the yellow pages or the internet.
My recent experiences with heating engineers have been decidedly mixed. I endured an incompetent, but apparently qualified plumber over several months who spectacularly failed to fix the temporary problems I was having with my boilers. The result was I ended up having to call out the manufacturers engineer, from Worcester Bosch, to try and remedy the, by this stage, desperate situation. All this was not cheap, £185 for the Worcester Bosh engineer; this was after I had already shelled out for a new PCB. Landlords are in the unenviable position that not only do they have a technical mounting to climb in trying to understand all the technical guff that is passed their way by the heating engineer but also that they sort of have a duty of care with their tenants to keep the heating and hot water on.
All this hassle got me to thinking whether I should reconsider boiler insurance and take a leaf out of expert student landlord book Terry Samuels AKA Bee In The Bonnet who has been using insurance for years. Firstly, how long should a boiler last before you should be expected to need a repair?
What are typical boiler repair costs?
Repairing boilers ain’t cheap. I know this having shelled out over £500 in recent weeks on the repair of two relatively new boilers (less than 5 years old). Landlords should look at the blog for potential boiler repair costs.
Reliability data gathered by Which in 2006 found nearly one in three boilers up to six years old breaks down. This is high compared to most domestic appliances. Their survey of nearly 1,300 Which members with boiler insurance, found 70% have had at least one emergency repair and of those, nearly a quarter have had more than five repairs.
The true cost of boiler breakdown for a landlord
Research carried out by Which found it’s usually cheaper to use a heating engineer to carry out repairs to a landlords boiler when needed, rather than buy a breakdown contract. Over three years it costs, on average, less than half as much.
Where a landlord doesn’t have a regular, reliable and cheap plumber, finding one that isn’t going to rip you off isn’t easy. Emergency plumbing rates and call out charges will quickly rack up a large bill and that is before any parts have been purchased. For example the PCB board I had to purchase to fix one of my boilers was over £150. For those in London a quick check on Pimlico Plumbers weekend charge rates for heating services showed an hourly day rate starting at £170 per hour.
The cheapest breakdown cover available to a landlord they found from the major providers was £108 a year, or £324 over three years. This compares to landlords who didn’t have a contract but had to have repairs done paid £150 over three years, on average. In simple terms, the Which research concluded that; getting repairs done when needed saved at least £58 a year.
Their research also showed that over one in 10 individuals without cover spent more than £324 – the cost of our cheapest contract – over three years. This means that to a degree it’s a matter of luck. Some landlords will be lucky and avoid large costs; others like me recently will get landed with a couple of cracking bills and the worry that I will have to fork out again if problems arise in the future.
Factoring the cost of a landlords time
The other crucial consideration for a landlord is time.
Finding a competent heating engineer isn’t always easy, especially over busy times or if a landlord has little experience of dealing with plumbers and central heating systems.
In deciding whether to take out a policy a landlord should consider what their time commitments are. For instance for somebody like myself who is self employed then I have the flexibility of being able to phone round and arrange a heating engineer. For those landlords who do not have this luxury, insurance offers the benefit of being able to guarantee access to an engineer at any time. Likewise if you are a landlord with a an older boiler, who is on a tight budget, then having the certainty that you are not going to be hit with a repair bill of £200-300 is an attractive reason to take out cover.
Other boiler costs for a landlord
One of the on going posts of a boiler is the potential servicing cost. In addition a landlord also has the cost of the CP12 the gas safety check that needs to be carried out each year. It’s always adviseable to get your gas engineer to combine your CP12 with the service and thereby avoid an additional call out charge.
More boiler stuff: