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Importance of the Correct Insurance

Like any businessman, one of the critical things for any landlord is to be properly insured. Failure to do this on any level could prove to be a very costly mistake. As a landlord you are running a property business. As such your main asset is your buy-to-let investment. It is vital therefore that you safeguard the value of your property investment should disaster ever strike.

Do I need specialist insurance?

Because of the nature of buy-to-let property, it is imperative that you have specialist landlord insurance. This is because household policies offer no cover for buildings, contents and landlord’s (property owner’s) third party liabilities whilst the property is being let out.

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Residential and Commercial Landlord Insurance

Things to watch out for:

There are a few things that the novice or first time landlord should do when insuring their property:

1. Make sure that your policy includes employers’ liability cover. Most landlords will not think they need it but if you engage anyone to do work on a labour only basis (i.e. they do not supply their own materials) and especially if you pay them in cash, it is likely you will be regarded as their employer in the event of them being injured whilst working on your property. I know that ALAN BOSWELL’s insurance provides cover for up to £10 million for any one claim. It is also worth mentioning that insurance for employers’ liability is compulsory by law so if you are deemed to have employed someone you could also have a criminal prosecution for not being properly insured.

2. Don’t be tempted to underinsure – if you do you might save a few quid but if disaster strikes you could be out of pocket by tens of thousands of pounds. That risk reward ratio just isn’t worth it!

3. Check the level of your excess. This is the amount of the claim that you are required to pay. It effectively controls the viability of small claims. The larger the level of excess generally the cheaper the policy. However, landlords should avoid going for too high an excess as this will effectively preclude making a claim for many of the small more numerous items. An excess of around £100 is ideal.

4. Most insurance companies automatically index-link your policy to make sure that your reinstatement value is maintained in subsequent years. It is worth checking this when you take the policy out.

5. An injury claim from your tenant, visitor or member of the public is potentially the most serious event that could befall a property owner. You therefore need to ensure that you have adequate cover. Alan Bosewell’s covers the policy holder for up to £5 million for any one incident; for example an incident involving carbon monoxide poisoning.

What does my insurance actually cover?

Landlord property insurance has two elements to it. The bulk of any premium relates to insuring the structure of the building. Many landlords let property part furnished ;that is to say with floor coverings, curtains/blinds, fixtures and fittings and “white goods” in the kitchen.

Most policies including Alan Boswell include items such as: carpets, laminate flooring, kitchens, bathrooms, white goods, light fittings and curtains. It is always worth checking that this is the case, otherwise it may be necessary to take out additional cover for the contents. This needs to be factored into the overall insurance cost when comparing prices. Items such as furniture are not classed as fixtures and fittings and will need separate cover. Policies will normally replace items on a ‘new for old’ basis.

It is worth noting that there is normally a clause in the policy which states that a loss will only be covered if there has been ‘forcible or violent entry or exit’. Therefore a policy will only protect you against damage by the tenants and not property theft. This is why having an adequate rental deposit is vital.

Finally, check that the policy has some provision for cover against accidental breakage of sanitary fittings and fixed glass such as windows as these are one of the most common area of damage.

How much should I insure my property for?

The level of buildings cover you need will depend on the rebuilding cost of your property. It’s possible to carry out a pretty accurate estimation of this using the Building Cost Information Service (BCIS) which is part of the RICS. This calculator takes account of the area that the building is in, the type of property and its’ construction and will then generate a reinstatement value on which to base the level of insurance you require.

Where to go to get cover?

There is now a huge range of insurance brokers offering buy-to-let insurance. Many have sprung up in recent years that cater for the rising demand from increasing numbers of landlords. The reality is that there is not a huge difference between the cover offered.

This is because ostensibly there are three or four insurance companies that actually underwrite the policies. The main differences come in the form of price and quality of service. One of the beauties but also the drawback of the internet is that it proffers a huge choice.

However with this comes the ability of providers to differentiate their products by selling the same product through different channels at often markedly different prices. They do this because they know that they will catch out a certain percentage of consumers that massively over pay due to inexperience or inadequate research.

This is why I have always used Alan Boswell. I’ve conducted extensive research and whilst they may not offer the absolute lowest premium it is possible to obtain; their cover at £1.58 per £1000 of cover is amongst the lowest in the market. They can afford to do this because they are an established specialist provider they don’t need to spend a fortune on marketing. This is because much of their business is repeat business secured through the schemes they have been running for years with local landlords associations.

They now have a dedicated landlords department, with many of their staff being active property investors themselves. This helps because it means instinctively they know what landlords need and if they have problems they have the experience to help. Internet and e-mail access makes communication simple and straightforward.

I would always strongly urge landlords to compare as many rates a possible to ensure the best deal. Property Hawk has included several market leading companies for comparison. However, if you are ‘time poor’ and want a competitive policy using a company with a proven ‘safe pair of hands’ I would say you could do a lot worse than use Alan Boswell.

CLICK4QUOTE.COM Tel – 01206 771755

Residential and Commercial Landlord Insurance



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