Insurance 5 Ways to Save
The process of buying landlord insurance can often be overwhelming. This is not because landlord insurance products are difficult to understand. No, the confusion often arises because of the huge range of choice that confronts landlords when they try to choose a landlord insurance policy that is good value and also delivers.
In essence when it comes to insuring your buy-to-let properties there are two types of landlord insurance. Firstly, there is landlord building insurance which insures your buy-to-let property against damage or structural failure. The other type of insurance covers the landlord against damage to the fixtures and fittings of their buy-to-let property. Some landlord insurance policies include both so it’s worth establishing this before you buy.
Five things to consider when choosing your landlord insurance:
Here’s a summary of the 5 most important things that a landlord should know before buying their landlord insurance:
1. Do I need both landlord buildings insurance and contents cover?
The answer is not necessarily. It will depend on the type of cover that a landlord needs. If a landlord’s property is being let unfurnished for example some landlord insurance policies will actually cover white goods such as washing machines and fridge freezers as part of the buildings cover. The cover will also include curtains and floor coverings such as carpets. This will save a landlord having to obtain separate contents cover unless they intend to let the buy-to-let property furnished.
2. Do I need specialist landlord insurance?
I know several landlords who either have not bothered with any landlord insurance or have used a standard residential policy to try and save money or time swapping their landlord insurance policy over. Fine! You may be lucky and get away with it. Let’s face it how many of our buy-to-lets are likely to burn down in a year. However, more worrying for landlords is the public and employers liability risk that a landlord is potentially exposed to. For example if you employ somebody to fix the roof, clean the windows even; and they slip and fall, they could sue you for big bucks. Even the post man who trips on an encroaching tree root could take you to court under public liability laws. The long and short of it, landlord insurance is a must. It ain’t worth skimping on and then watching your hard earned investments going up in smoke in legal fees!
3. Where’s the best place to get your landlord insurance cover?
Landlord insurance is no different to any other type of insurance in that there are a small number of companies that provide the landlord insurance policies. Large companies such as Aviva and Axia actually underwrite the insurance policy. Landlord insurance policies are then sold by insurance brokers who sell direct to landlords. In recent years the internet has spawned numerous price comparison websites who present themselves as comparing in one place a whole range of products such as landlord insurance and allowing landlords to choose the cheapest policies from them. Not so. In reality they will just carry a whole range of landlord insurance brokers who will often pay to appear on their websites. The landlord insurance brokers that appear first are not necessarily the cheapest or best; just the one that pays the most money to the comparison website.
4. How to get the best deal?
There is only one sure fire way of getting the best deal on your landlord insurance. That is to shop around and when you have found a good deal a landlord needs to ‘haggle’. I know us Brits aren’t very good at bartering but if you really want to get the best deal, then that’s what you have to do. I knocked £50 off my Alan Boswell insurance last year by doing just that. The landlord insurance brokers don’t like it, but they don’t like not getting your business even more! You have to be realistic though. If you think you are going to shave 25% off your premium forget it, but 5-10% is not unfeasible as many landlord insurance brokers will write the business for little or no profit in year one hoping like Alan Boswell, that they will have a 90-95% retention rate of their landlord customers in subsequent years.
5. Things to look out for when selecting your landlord insurance policy.
Many of the landlord insurance policies even where they are provided by the same insurer have subtle differences in their standard policies because some landlord insurance brokers are able to tweak their policies and terms of cover. Therefore, there are subtle differences between landlord insurance policies which make the concept of price comparison websites a little pointless. One obvious difference is the excess that the landlord insurance company charge on their policy. Some will only charge a £100 excess whilst more typically this is nearer £250. Some landlord insurance broker like Alan Boswell can adjust their excess to make the landlord insurance quote cheaper, so it’s worth finding this out if want to bring down your costs in return for taking a greater risk.
Unfortunately, a landlord insurance policy won’t protect a landlord from malicious damage or theft by the tenant. This is why it’s so important to protect yourself by either taking a reasonable tenancy deposit or ensuring you have a good guarantor on which to fall back on.
Other aspects of landlord insurance
Other issues that are pertinent to a landlords when insuring their buy-to-let properties are:
Are you a leaseholder? If so you may be getting ripped off by your managing agent overcharging you for the block landlord insurance. We investigate what a landlord’s options are.
Landlords worried that their tenants will suddenly stop paying the rent should check out tenant guarantee insurance.
How to leverage the power of your property portfolio in getting the best rates for landlord insurance? Do you have a portfolio of buy-to-let properties with a value of over £2m and or more than 15 properties. Find out how you can save money on your landlord insurance.