Landlord Insurance Options
Landlord Insurance Minefield
My landlord insurance falls due this month. As usual I leave it to the last minute. Next year I will get organised and spend a little bit of time trawling the Internet and getting quotes. One thing I would say is that the young lady at Alan Boswell’s who took my payment was delightful and very helpful when I had to put an additional property under cover. It was almost worth enduring the pain of saying goodbye to over £1400 of hard earn ‘dosh’ just to hear her youthful and enthusiastic tones (almost).
Saga insurance scandal
You may have heard recently about the scandal involving Saga’s insurance arm that has been charging octogenarians between 3 and 4 times the going rate for their home insurance. I’m afraid that this exposes the real truth of the insurance business. It relies on the laziness of the insured to make super profits. I don’t know whether you are aware that Saga was taken over by private equity fund CVC in 2007. The new fiscal discipline meant that the new owners were determined to sweat their equity and drive revenue from their users. Unfortunately, this involved a very profitable insurance arm that relies on their punters renewing their insurance every year without questioning it. The result is that you have the rather unpalatable situation of pensioners being ‘ripped off’ for their loyalty.
Landlord insurance ‘the unpalatable truth’
Landlord insurance is no different. Those landlords that don’t search for the best deals will find that they end up on the saga style escalator. One thing to look out for is the way insurance companies inflate the sum insured every year. They claim by inflation. But as the Saga story indicates this can be above the general rate of inflation but over a long period it means that your bill grows excessively!
It’s no coincidence that Warren Buffet of Berkshire Hathaway loves insurance businesses. Steady predictable income generated businesses that have above inflation income growth.
What a smart landlord needs to do
There is no getting around it. A landlord does need insurance. One of my landlord friends thought rightly that landlord insurance was a rip off. It is but you would be mad to take the risk of not having it. Having said that the things that you can do to avoid the Saga trap is and get the best deal on your landlord insurance:
1. Do you need contents insurance on top of your building insurance. Some landlord insurers will include cover to your fixtures and fittings and white goods, carpets such as the Aviva policy.
Others you will need a separate contents element to your policy (make sure you check with them first).
2. Do I need to move my policy every year. Not necessarily. Most landlord insurers are receptive to landlords shopping round. They are keen to retain your business and as long as you can prove you can get a cheaper quote elsewhere they will match your quote.
3. Landlord insurance is there a difference in quality of cover? There is such a thing called 5 star landlord insurance.
I was surprised too. Do you need 5 star cover? Probably not but if you do need cover then it’s worth knowing about.
The reality is that you never win with landlord insurance “it’s a mine field” but I guess it’s trying to ensure that you can maybe get at least a draw out of them with a decent price and service. If you have any tips on beating the landlord insurers please please post them below.