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Insurance News from Assetsure .com.... Insurance Products for the Landlord - there are various insurances available to the Landlord who has acquired property for Buy to Let purposes. In general terms, these can be split in to the following categories.
Rent Guarantee.
Easily the most widely taken out is, Landlords Building Insurance, if you have a loan on the property from a mortgage provider, they will insist that you take out a buildings insurance policy and make a note of their interest on the schedule. The policy will have to satisfy the council for mortgage lenders hand book conditions and will thus have to provide you with a broad range of insurance perils. Most polices that are available are based on a Home Insurance policy and all the usual perils you would expect to see such as; Fire, Storms, Floods, Theft etc will be included in the policy wording. There are slight differences between a home policy designed for rental property and a standard policy wording. Firstly, the insurance company will be aware that the property is being used for letting purposes and the liability section of the policy will take this in to consideration. Secondly, the section relating to " Alternative Accommodation" will be replaced by Loss of Rent Cover. This cover will indemnify the Landlord if he is unable to collect rent from the tenant following an insured peril occurring at the property. The tenant may have to be moved out temporarily and the landlord will suffer from a loss of income. It must be remembered that this section of the policy covers loss of rent by perils, it does not cover loss of rent by tenant default. Tenant default cover, can be obtained by buying a Rent Guarantee Contract. There are a large number of buy to let buildings insurance policies on the market and the covers do vary slightly between insurance companies. You should be provided with a Key facts document and this will outline the cover on offer.
Landlords Legal Expenses - is a product that is often overlooked by many new landlords, probably because it is not heavily marketed by insurance providers. However, it is relatively cheap to buy and can provide valuable protection for Landlords. Many new landlords spend a good deal of time sourcing property and obtaining the best mortgage deal, yet spend no time at all thinking of other ways of protecting what is in essence an investment. Covers for this type of policy do vary dramatically and some, based on legal expenses for home insurance are fairly worthless. If you are going to buy a legal expenses policy, make sure it is designed especially for a buy to let landlord. Look out for the following covers, if they are included then you now the policy is worth considering.
Breach of Tenancy Agreement.
Rent Arrears Pursuit.
Eviction of Tenant.
Legal Defence cover.
TAX, VAT, PAYE, & NIC Investigations.
Legal help line.
Emergency Assistance Cover - this is another contract that is in the main overlooked but some good policies are available and a number of the major utility companies now offer cover at quite affordable premiums. This type of contract suits the landlord that really doesn't want to have to spend too much time in dealing with an emergency at the investment property. One phone call to a call centre and they will take of the administration. This can be quite useful if you can not be easily interrupted at work, its the middle of the night or perhaps you reside abroad. Of course if you have employed the services of a letting agent, their service may include co-ordinating any problems that arise at the property. This really is a type of insurance cover, where you have to study the policy wording most carefully. Covers do vary and their are lots of terms and conditions, you have to study a policy wording several times to be able to understand exactly what type of cover you are obtaining.
Rent guarantee cover, tends to be only sold by letting agents or in cases where the landlord makes a specific request for it. In essence, they will pay the rent if the tenant defaults on the payment. Before cover can be obtained, a suitable reference must be obtained on the tenant and the insurance company will usually specify from where the reference can be obtained. As well as the cost of the reference, the policy usually has an excess of one months rent and there may be a ceiling on the amount can be claimed. Premiums are not cheap and the market for this product is small.
Landlords Building Insurance - For a landlord who has just acquired a building with the intention of using it for buy to let purposes, insurance for the building itself will be the main priority. The basis of the insurance contract will be a range of perils, fairly similar to that you can obtain for your own domestic dwelling house. It will just be noted on the policy that the property is let to tenants. Obtaining suitable insurance will undoubtedly be a condition of your mortgage and whilst most lenders are only too keen to sell your their own buildings and contents insurance for your own home, when it comes to landlord buildings insurance, many are unable to offer the correct form of cover and you are left to make your own arrangements. In practice, this is not too difficult, there are now many insurers and brokers that are able to offer buy to let insurance quotations and shopping around will enable you compare the premiums and terms on offer. When you settle on a suitable contract, make sure the lenders interest is noted under the policy wording. Many landlords have reported a delay in having funds released, whilst waiting for the necessary insurance paperwork to turn up. Lenders, in general do not like releasing money unless they have proof that a building is adequately insured and their financial interest is noted.
Locating your market in advance is a good idea, as is discussing your plans for the property with the broker or insurer. Most policies are arranged on the basis that the property is already tenanted, but in many instances, this is not the case. Often, property is bought at auction or when purchased is in need of a makeover. In these cases, their can be a period of unoccupancy and many insurance companies are not to keen on this. Always point out periods of unoccupancy to the insurance company and mention what work you are having carried out to the building to bring it up to scratch. You may find that the insurers are prepared to allow you a period of 30 days before the tenant moves in, ask what would happen if this period is breached. You may find that once you go over a certain period of time , that cover is severely restricted. Often preparing a property for rental, can take longer than expected and in some cases, finding a suitable tenant can also result in a fairly long delay. It is also worth remembering that many buy to let insurance polices contain certain terms and conditions that will place a requirement on you to comply with any current legislation with regard to the letting of property, make sure that you study all terms and conditions most carefully.As well as the broad range of insurance perils, cover should also include loss of rent r. This is an important section of the policy and you should check to make sure that cover is included. At least one major product provider only includes this as an optional extra and it is easy to overlook. This section of the policy provides valuable cover if the tenant has to move out following an insured period rendering the building uninhabitable. Many landlords can appreciate the various perils that can occur at a property but fail to grasp what would happen to their rental income during the period of reinstatement following a loss. The mortgage will still have to be paid and with no rental income , this can place a large strain on funds. This section of the landlord property insurance policy does not include cover for tenant default, this is a separate type of cover
Rating of landlords landlord property insurance depends on a number of factors. In common with home insurance, you will need to advise the insurers, the location of the property, its construction and the rebuilding cost. As well as this information, they will need details of previous claims and if the property is in an area that has suffered from flooding or subsidence. One additional rating consideration for this class of business, is the type of tenant in occupation at the property. Our research has shown that the type of tenant can have a bearing on the insurance premium charged, as far as we can make put, there are a number of different groups. Firstly, and the cheapest are buildings that are rented to professionals. The term professional seems to be employed in quite a loose sense as it seems to apply to anyone that has a job. Another group includes students. A third group is for people that receive help with their rent from a local authority and finally, there is a group where property is let to a Third Party such as a local authority or a housing association. Premiums seem to vary depending on who holds the contract for letting but you will have to do your own research on this matter. There seems to be very little you can do to obtain a discount on this type of insurance, in some cases, offering to pay a higher excess may bring the premium down a little but most insurers don't seem to offer much else. One thing to consider is that often brokers and insurers are keen to provide quotes on insurance portfolios and if you have a number of properties you may be able to agree a block discount.
Landlords Contents Insurance - Contents insurance for a Landlord can be added to a building insurance policy and this is probably the cheapest way of obtaining cover. On the basis that most landlords do not provide a great deal of contents for tenants, a stand alone policy can prove to be quite expensive as you will normally fall under the insurance companies minimum premium threshold. Obtaining landlords contents insurance as a stand alone product is sometimes the only option, particularly if the buy to let in question is a flat and the building insurance is arranged by the Freeholder. Although contents insurance is not compulsory, when coupled with building insurance, it is cheap to buy and can afford valuable protection. Cover is based on a standard insurance policy that you would expect to have for your own home but all of the cover for valuable items such as jewellery and personal effects is stripped out. As well as the basic set of perils, you l should also receive the liability cover that is attached to the ownership and supply of the contents to the tenant. It is worth remembering that you are not responsible for insurance of the tenants contents. They will have to make provision for their own cover as you have no insurable interest in their belongings. Covers do vary from one insurance company to another and you should always study the Key facts documents. Landlords Contents Insurance is available as either an addition to a buildings insurance policy or as a stand alone insurance contract. From all the landlords we have encountered and from our own personal experience, the level of contents placed in a rental property is not always that significant, often it is just several thousand pounds. Arranging a stand alone policy can prove quite expensive as many insurers have minimum premiums which can result in a disproportionate charge. It thus seems that the cheapest way to obtain contents insurance for your buy to let, is to add it to a building insurance policy wherever possible. Of course, this is not always a valid option, particularly when the property you own is a flat and the freeholder takes care of the building insurance. It is highly unlikely that you will be able to add contents cover to this arrangement.
The cover available does not vary too much from the policy you would expect to receive for your own home. All the usual perils are included although certain sections afforded by a standard policy are removed. Cover for valuable items is usually deleted as is cover for personal effects, most insurance companies want to make sure that they re only covering standard items such as furniture & bedding, There may also be some restrictions on electrical items especially portable electrical appliances and it is important to read the policy Keyfacts to make sure the cover you are contemplating buying suits your needs. Unlike landlord building insurance, you are not obligated to buy this type of cover and in view of the often low sums insured many landlords simply don't bother. However, unless the policy wording you buy has a fairly wide liability section, you will need contents insurance cover to provide you with the liability insurance which is attached to the ownership and supply of the contents. It may seem a little far fetched but there is a possibility of a tenant injuring themselves on an item of contents that you supply and wanting compensation. The liability section of the policy will also include the cost of defending these claims and for this alone, it makes contents insurance worthwhile.
Calculating your sum insured on which the insurance premium is based is fairly straight forward, you simply need to tot up all the replacement costs as per your inventory. Although, the property is rented, most insurers seem fairly happy to provide cover on a new for old basis although wear and tear will of course be excluded. The range of perils of offer can be extended to include Accidental Damage but it would seem that only a handful of insurers are prepared to consider the risk of malicious damage by tenant. Perhaps when calculating your insurance costs, you can consider the costs and likelihood of this event happening. Premiums to a certain extent are based on the area in which the property is located, unlike standard home insurance, much less emphasise is placed on security, mainly as in a tenanted property, it is difficult to enforce and of course, the insurers are not going to cover valuable items. There is usually a policy excess, £75.00 or £100.00 seems typical and this helps keep premiums down by preventing policyholders from entering small claims. If you are a landlord supplying furnished or part furnished accommodation, make sure the the tenant is fully aware of responsibilities for insurance. As landlord you have no responsibility or financial interest for the tenants contents, if they decide to bring their own furniture in to the property, then they must buy their own insurance policy.
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Same day Issue of Policy Documents for Landlords in a Hurry
