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REMEMBER
INADEQUATE INSURANCE COVER CAN COST A FORTUNE!
- Your investment property (or home) will be one of
the most valuable things that you own.
Brief
summary of Landlord Insurance
Brief
summary of Tenant's insurance
_____________________________________________
Landlord Insurance for Let Properties
This
is a most important area that should not be overlooked when
Landlords let a property. The risks associated with let properties
are significantly different to owner occupied properties therefore
you are well advised to use an insurer who specialises in
this type of property insurance.
An existing, standard, buildings or contents insurance policy
on a property owner occupied may not cover the property or
contents when it is let, may restrict the cover and or increase
the premium. Years ago insurance companies were not happy
about covering let property in the UK, but today you have
a choice.
Two of these long established specialists - Homelet
and Letsure can be contacted on this page by clicking
on the appropriate section above. You
can obtain a quote on line and arrange cover on line. You
can pay monthly or annually.
You
should remember that the following categories of Insurance
for Landlords should be looked at:
Buildings
Insurance
-This is for re-Build costs - not market valuation.
It is essential that your property is adequately insured.
Sometimes the re-building value will be considerably lower
or higher than its market value. Older properties in the lower
priced areas in the UK will cost much more to re-build that
their market value.
In
the UK many properties are under insured, which means in the
event of a claim, insurers will not pay the full amount of
the claim. If you have any concerns about the amount of cover
you need for re-building contact a professional qualified
surveyor. If you have an apartment, the buildings insurance
will often be part of the amount you pay out annually for
service charges and ground rent. Check out the situation with
the block management agents. (See below)
You
should also advise and obtain consent to let your property
from your mortgage lender, existing insurer and head lessee
(for leasehold properties). Failure to obtain written consent
from these parties may render your insurance void in the event
of a claim.
Many
general insurers and mortgage lenders will not cover the property
if you intend to place certain categories of tenants in your
property i.e. Student, Multiple single sharers and
tenants in receipt of State Benefits. Check this out.
Usually
buildings policies will provide an element of Employers
Liability cover. This covers claims for death or injury
to anyone you employ at your property i.e. a gardener, painter
etc. If you are letting to students or to tenants in receipt
of state benefit the university / local authority will normally
require a minimum cover.
It
is also essential that your policy includes Property Owners
liability cover to a similar limit to cover injury, death
or damage to individuals on or adjacent to your property.
When
you take out a Buildings Policy the main insured perils
should include Fire - Lightening - Aircraft
- Explosion - Smoke - Impact - Burst
pipes or leakage of oil - Storm or flood
- Subsidence damage - Theft- Malicious damage.
(Some policies will give the option of malicious damage caused
by the tenants - a valuable option for let properties).
Most
policies will compensate you for loss of rent following
damage from one of the above perils if the property is uninhabitable.
Check this out with your block management agent if you have
an apartment and don't arrange the buildings insurance yourself.
It
should be noted however, that damage to property caused
by tenants who are classed as DSS aylum seekers, refugees
or students will no longer be covered under some buildings
insurance for blocks of apartments and you should seek professional
advice. If your flat is let and you have not taken out additional
insurance, you will be held personally liable in the event
of damage to property, including neighbouring properties,
howsoever caused, including all costs incurred by the Management
Company, solicitors, neighbours etc.
Contents
Insurance
- A high percentage of owner occupied properties in the UK
are under-insured for the contents. Generally individuals
place a value of what the contents are worth not what it would
cost to replace them with new items.
Most
specialist insurers will offer the option of a full contents
policy or a limited contents policy. Limited Contents
Cover. As many UK properties are let unfurnished / part furnished.
A limited contents policy would typically give a fixed limit
of cover for items such as: Carpets - Curtains - Blinds -
Light fixtures and fittings - Kitchen white goods on a new
for old basis.
If
your property is fully furnished or the limited contents would
cost more than £5,000 to replace, you should have a full
contents policy. You would normally select the sum you
wish to insure for; again this should be adequate to replace
all of the contents on a new for old basis.
Emergency
Assistance
-This type of cover will provide assistance for the landlord
and the tenant in the event of an emergency at the property
such as: Failure of the electricity supply - Failure of the
cooking facilities - Lost keys - Plumbing problems - Leaking
roofs or guttering - Security of doors and windows. Policies
will provide parts and labour cover up to a specified amount
and either the landlord or the tenant can call a 24hr 365
day Helpline. (Check out the details on offer from the
insurance company)
 
If
you have not taken a full management service from your letting
agent or do not live near your property this can be a cost
effective solution. Please note that that these policies cover
Emergency Assistance only and not a repair service
through lack of routine maintenance.
Legal
Expenses Insurance -
Even when using the services of a professional letting agent,
problems with tenants can occur. In many cases the tenants
personal circumstances have changed during the term of the
tenancy.(See Section Advice
for Landlords) Situations like loss of their job,
failure of their business, a relationship break-up, accident
or illness will effect the tenants ability to pay the rent
or their inclination to move out at the end of the tenancy.
All
these situations can be resolved but will usually involve
a Court hearing and solicitors costs. Legal expenses insurance
will usually cover all of your legal costs, solicitors/barristers
fees, Court and bailiffs' costs. Most such policies will cost
well under £100, which represent less than 45 minutes of a
specialist solicitors time on a normal fee paying basis. The
"average" legal cost of a possession hearing in 2001 was £785,
many cost well over £1,000.
Rent
Guarantee Insurance
-These policies are invaluable for many landlords. As a tax
deductible premium this will guarantee you receive the rent
you are expecting from your property regardless of your tenants
personal circumstances, ability or willingness to pay the
rent.
If
you have a mortgage on the property or have calculated your
rental income verses your outgoings this will ensure you do
receive your rent. Most such policies will include the legal
expenses, as detailed above. You will receive your rent and
the legal fees to obtain vacant possession will be covered.
Policies
will usually guarantee your rental for a fixed period, typically
6 or 12 months. Some policies will provide additional cover
once you have obtained vacant possession until you are able
to re-let your policy.
The
costs vary from a fixed cost policy or are commonly rated
as a percentage of the annual rental figure, typically 3-4%.
N.B.
This information should not be relied on for accuracy and
is presented here without the responsibility of jml Property
Service and the website it is being displayed at. ©jml property
Services 12-04
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New
to letting or renting?
Take
a look at our landlords
advice - Tips
for landlords and tenants
advice and Tips
for tenants guides
Why
do I need Landlords Insurance? and
Article
on Landlord Insurance
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