The storms, floods and gale force winds that battered many parts of Britain in recent weeks have led to almost half a million individual insurance claims.
Figures released this week, by the Association of British Insurers, indicate a current and growing list of over 440,000 claims adding up to a staggering total of £1billion.
Wind, water and subsidence damage to domestic properties, businesses and private rented accommodation has created its own tidal wave of compensation claims, with the Government encouraging insurers to ‘fast track’ them wherever possible to help minimise the misery faced by particularly hard hit victims.
As the residential lettings market continues to grow, Belvoir – the UK’s leading lettings specialist – is now urging landlords to check their insurance policies to ensure they are adequately covered for as many eventualities as possible.
“Specialist insurance which provides adequate cover in case of emergencies such as the recent devastating floods is vital for landlords,” says Charlotte Baker who owns the Belvoir Lettings office on Burton Street in Melton Mowbray.
“For example, the landlord of a flooded property who also has contents insurance with us is not only covered for the cost of damage to the property, but can also cover the cost of new accommodation for his or her tenants – eliminating the need to pay rent on the other property.”
Under-insurance is also a common problem in the UK, with many people simply having no idea of the level of insurance cover they require. Failure to purchase adequate insurance can result in insurance companies not paying out in full in the event of a claim, and in certain cases even refusing to pay out at all.
Belvoir is keen to issue a reminder to the growing number of landlords new to the business of renting out property, that the risks associated with insuring a property intended for let are quite different to those insured through normal home insurance policies.
For many people the purchase of a property is their single biggest investment. When you consider the greater exposure to risk faced by renting out that property – combined with the amount of capital invested – it makes sense to make sure it is adequately protected.
Charlotte adds, “Landlords or “buy to let” insurance is very different from conventional home insurance in many ways because there are numerous specific considerations.
“For example, the unoccupied property limitation on a standard home insurance policy is 30 days. A landlord policy can give up to 120 days cover for occupancy, which is particularly reassuring during the colder months.”
Charlotte has identified some other key points to consider when looking for the right type of insurance for a buy to let property.
HIGH RISK
Check whether the insurer has exclusions for what they may consider as “high risk tenants”. Some insurers will not offer cover for properties occupied by students, multiple single sharers, asylum seekers or tenants who receive state benefits.
FIXTURES AND FITTINGS COVER
The majority of property in the UK is let unfurnished or part furnished but limited contents cover is available to cover fixtures and fittings such as sanitary ware and light fittings. Cover for liability can protect you against large compensation claims as a result of loose carpets, faulty light fittings and defective cookers. There are even some policies that cover for damage by tenants’ pets.
REBUILD COSTS
The insurer will ask for a rebuild cost. This is the amount of money that would be necessary should the house need to be rebuilt. It is not the market value of the property. Making the mistake of giving the market value could have a considerable effect on the premium quoted, as the rebuild cost is usually lower than market value. But be aware that there could be instances where the rebuild value could be higher than its market value. Older houses in a lower priced area of the country will probably cost much more to rebuild than their market value.
LOSS OF INCOME
Imagine your ground floor property is victim to the increasing incidents of flooding. Your tenant is forced to move out and decides to initiate legal proceedings against you for a variety of related factors. Where standard home insurance would give only cover for damage to the property and your possessions, landlord building insurance could also provide cover for the loss of rental income while the flat is being repaired, cover for alternative accommodation for your tenant – plus cover your legal expenses against your tenant’s lawsuit.
RENT GUARANTEE COVER
This covers a tenant unexpectedly leaving your property whilst owing you unpaid rent. This is valuable insurance for a landlord that could experience difficulties in making mortgage payments on their property if the tenant defaults on rent payments. Some insurers also offer the option for £10,000 of legal cover to assist with pursuing the errant tenant.
LIABILITY
As a landlord you are responsible for the health and safety of your tenants. Liability cover will protect you against lawsuits for accidents, injuries or even fatalities at your property. The typical maximum for standard liability is £2m.
KEEP EVERYONE INFORMED
Inform your mortgage lender, insurer and lessee (for leasehold properties) that your property is rented. Failure to notify these parties could result in insurance claims being refused.
Charlotte says, “Choosing the right insurance cover for your property is a major decision and the points covered here give only a broad overview of some of the issues that must be considered.
“Landlords should decide on the level of cover that they require and once confident about the type of protection needed they will then be equipped to compare landlord insurance policies to find one that suits.”
Belvoir’s recommended insurance company is Endsleigh who has worked with Belvoir to produce what the two companies consider to be the most comprehensive and
innovative insurance product ever to be offered as a bespoke product for the lettings industry, landlords and tenants. More information can be provided by your local Belvoir office.
Insurance should be taken seriously by both tenants and landlords. Having the right value and type of insurance cover is essential. Experience shows us that it really is worth taking the time to research your insurance needs. In the event of a claim, many people are shocked to discover that they are in fact under-insured.
