Jim Mitchell, owner of one of Leicestershire’s most successful letting agencies predominately covering Loughborough & Coalville looks at what the real costs are when you buy cheap landlord insurance.
There is a growing tendency amongst people to look almost automatically for the cheapest deal. Many perform an internet search and they are then tempted by cheap deals from companies like Direct Line or the NLA. Indeed Landlord building insurance is a very competitive market and there are lots of brokers, mainly on-line, offering not to be beaten on price.
Detail
In Jim’s experience few landlords ever check in detail what is covered but landlords are vulnerable to some very specific risks such as malicious damage by tenants or their visitors, rental loss due to an insured risk and public liability. The real cost to a landlord is likely to come if they have to make a claim on an unsuitable policy. If your letting agent recommends a policy to you then listen carefully and examine the policy – it should provide the cover specifically suitable for a landlord and could be exactly what you need. Saving money on a policy sold by a remote 3rd party could lead to problems down the line. Your letting agents will have a format and system in place for reporting claims for you, providing evidence for loss assessors and enabling them and tradespersons for quotes unhindered access. Professionals instructed directly by an insurer are unlikely to collect keys from your agent and arrange suitable access and this can cause extra costs, inconvenience and big delays.
The cost of an unhappy tenant
Delays caused arranging loss assessors and tradesmen for common insurable incidents like water leaks and the damage they cause creates immense frustration and inconvenience to your tenants. On the other hand, tenants appreciate that things do go wrong and if they are handled with the minimum fuss and disruption then they will appreciate the service. They are less likely to give notice and leave when there is a problem leaving you with a potential void and the costs of re-letting on top of any other costs.
Recommendation
When you make a claim you want the claims experience to be simple and swift. You don’t want a claim being dragged out for weeks owing to issues arranging access for loss assessors and contractors. Incidents and damage do occur at rented houses; we see it often and have to deal with it for the landlord. Use the insurance your letting agent recommends. It may not be quite as cheap to buy but it will save you money and reduce frustration and unexpected costs.
You want your policy to include important aspects such as public liability in case of injury to a third party at or outside your property (potentially very expensive so please ensure you are covered). In many policies this aspect is covered only in the contents insurance and many landlords mistakenly fail to take out contents cover if their property is unfurnished thinking they don’t need it. Check carefully for loss of rent cover caused by voids that result from an insurable incident like a flood etc. Lost rent and voids can quickly lose you four figure sums.
Remember as well your insurance premium should be a tax deductible cost of your lettings business so that gives you a financial advantage.
