Insurance
In 1996 there were, quite literally a hand full of recognised buy-to-let mortgage providers. In 2004 it was estimated that this number was in excess of 250. In a similar way, approximately 10 years ago only a few niche Lloyds syndicates and a limited number of commercial property underwriters were prepared to underwrite Let Property Insurance.
Today Residential Landlord Insurance can be sourced through a large number of underwriting agents working with leading insurance names such as AXA and Zurich.
In an ever growing minefield of options, how can anyone be certain they are purchasing a product that meets their needs at a competitive cost? While it will always be difficult to be precise, there are always a few key points that should to be compared before making a buying decision. These are:
- Type of Tenant
- Unoccupied periods
- Loss of Rent
- Terrorism
- Property Owner Liability (a.k.a. Public Liability)
- Employers Liability
- Excesses
Type of tenant
In the case of some policies, the insurance premium will depend on the tenancy type. Working and/or Professional people attract, as you might expect, a lower premium than Students, DSS or Asylum seeking tenants. You should be careful to alert your insurance provider if the types of tenant change and be aware of the limits allowed by periods of un-occupancy as outlined below. Some policies may be cancelled if the tenancy changes.
Unoccupied periods
Naturally due to the nature of this market your property will be vacant for periods between tenants. It is important that your property insurance policy continues to offer cover should your property become vacant. Some leading brands will provide up to 90 consecutive days between tenancies with full cover (subject to certain terms) to support this situation.
In most cases you will be required to keep the property in a good state of repair, inspect the property on a regular basis, maintain the heating, ensure the property is secure etc. You should also be careful to inform the insurer if the property is undergoing any refurbishment or construction whilst it is unoccupied as this may be relevant in the event of a claim.
Loss of rent
Loss of rent cover is only available through specialised carriers and it is important that you check this is part of your cover. This benefit will help ensure that you continue to receive a rental payment if your property becomes unfit to live in due to damage insured under the policy. Cover available ranges from 15% to 30% of the building sum insured.
Terrorism
Let property insurance has been historically provided by commercial underwriters who generally exclude terrorism, whilst standard residential home insurance included terrorism cover. Only a few underwriters will include terrorism in residential let properties automatically, whilst most will quote separately as they do for commercial properties.
This element of cover has become almost standard with Buildings and Contents insurance of Let properties. Leading insurance companies such as AXA and Zurich recommend a claims limit of up to £2m, whilst offering additional levels of cover in special circumstances
Employers Liability
Once again historically it has not been the usual practice to include this element of cover and it is not always automatically included in a Landlords Buildings policy. If however it is provided, the prescribed legal minimum is £10m. Be aware that when this element of cover is provided as part of a buildings insurance product it does normally only extend to Employees that are employed in relation to the organisation and management of the property.
Excesses
As you might expect, increasing your excess decreases your premium. What you need to be acutely aware of is that insurers apply a ‘standard’ excess, but this often varies from company to company. Some insurance providers apply a greatly increased ‘standard’ excess and it is important that they tell you the excess limit before you agree to go ahead with the purchase. It is very important that you are sure that the policy excess meets your requirements from the outset.
All our products are fully inclusive for all standard perils, and we pride ourselves on the provision of comprehensive insurance products designed especially for property owners and investment landlords.
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