Landlord Insurance: Tips on Avoiding 4 Common Claims

As a landlord, you face a number of risks every day, and your landlord insurance policy can help protect your investment if the worst should occur. While this coverage offers you peace of mind, having to make a claim and make unnecessary repairs to your property can waste a great deal of time and resources. Here are some tips to help you avoid having to make these 4 common landlord insurance claims.

Malicious Damage

Malicious damage is one of the most common insurance claims made by landlords. While it can be difficult to protect your property against this type of damage, there are some steps you can take to minimise the risk.

The first thing you can do is take extra precautions when vetting tenants. Letting to responsible tenants can go a long way in minimising the risk of malicious damage. Checking references and meeting with the potential tenant in person will give you an idea of what type of tenant they would be.

Tenants may also be less likely to cause intentional damage to your property if you establish a good working relationship with them. Responding to your tenant’s questions or concerns in a timely manner and ensuring that repairs are made as soon as possible will help keep your tenants happy.

If your property is located in an area that is prone to malicious damage, you may consider placing a lock on the garden gate or installing reinforced windows. Depending on your location, you may even consider implementing a security system.

While you cannot completely negate the risk of malicious damage, you can take precautions to help minimise your risk.

Storm Damage

It may be impossible to prevent a storm, but you can take precautions as a landlord to protect your property. This includes:

  • Ensuring your roof is in good shape and properly repaired.
  • Replacing loose tiles.
  • Repairing holes in a timely manner.
  • Ensuring gutters and pipes are secure, free from blockages and in good condition.

If a damaging storm is expected, you can work with your tenants to help prevent damage. This includes removing loose objects from the garden, such as potted plants, and bringing them indoors. You may even consider reinforcing windows and doors with plywood coverings if high winds are expected.

Water Damage

Escape water claims are, by far, the most common claim made by landlords. It typically involves poor pipes or plumbing, such as a burst or leaking pipe. If repairs are not made quickly, these incidents can cause serious water damage and in some cases, affect multiple properties. For instance, if your tenant lives in a flat on the second floor, a leak in the bathroom can drip into the bottom floor flat and cause more water damage.

Luckily, this type of claim can largely be avoided by checking your pipes on a regular basis. When inspecting your pipes, make sure that they are secure and free from leaks. Pipe checks become even more important during the winter months as frozen pipes are more likely to burst. Advising your tenants to leave the faucet dripping in the winter can help prevent freezing. Also, make sure that your tenants understand where the emergency stopcock is.

Accidental Damage

Accidental damage is another common claim, and one that can also be difficult to avoid. This type of claim may include damage to your carpet, sofas, bath fixtures and other items in the building that belong to you, the landlord. Even with responsible tenants, accidents can (and likely will) occur. This can be a major concern if you offer furnished property. Accidental carpet stains are hard to avoid, but much like the other claims on this list, you can take steps to minimise the risk.

Again, vetting your tenants properly can go a long way in ensuring that your property remains in good condition. If you are working with an agent, he or she should have a proper chat with any potential tenants to get an idea of what they are like. Unfortunately, certain tenants are more likely to cause accidental damage than others. Students, for example, are more likely to damage your property than a middle-aged couple without children.

It is also possible to minimise the risk of damage by making smart design choices. For instance, you may consider installing laminate flooring that is easy to clean instead of carpeting.

While there is no sure-fire way to prevent these types of claims, you can be proactive as a landlord and take steps to avoid them. Ensuring that your property is fitted with flooring and furniture that is easy to care for and maintain can help minimise the risk of an accidental damage claim. Properly vetting your tenants can help prevent a malicious damage claim, while reinforcing your property can help you minimise storm damage. Going the extra mile will pay off in the long run and help protect your investment.

The 5 Essentials of a Landlord Insurance Policy

Every landlord should have an adequate landlord insurance policy. A standard home insurance policy will likely not cover any damage caused to your property if your home is occupied by tenants. A landlord insurance policy does more than just cover damage to the building. It covers liability, contents and in some cases, loss of rent. To protect your investment and your income, you need to ensure that your policy includes the following coverage:

Buildings Cover

Buildings cover is the most basic, but one of the most important, types of insurance. As you may have guessed, this covers the building itself. This may include structural issues, the plumbing system, trace & access, damage to landscaping, etc.

Should your property be damaged in a fire, flood, natural disaster, or because of theft, your buildings cover will cover the cost of repair, allowing your tenants to move back into the property more quickly.

It will also cover the cost of rebuilding the structure. Your insurance policy will pay out the entire amount your property is worth should you need to rebuild. For this reason, it is essential to supply your insurance company with an accurate estimate of how much your property is worth.

Buildings insurance is essential for every landlord. Nature is unpredictable, and without this coverage, you may wind up having to pay for repairs or rebuilding. With proper insurance, you can rebuild and preserve your investment. Without appropriate cover, you may not have the funds to make repairs.

Contents Cover

Contents cover is also included in most basic landlord insurance policies. It covers items in the home or building that belong to you, the landlord. Contents cover is essential for every landlord, but if your property is furnished, it becomes even more important. Items covered under contents insurance may include:

  • Furniture
  • Fixtures and fittings
  • Carpeting

Items covered under contents insurance will vary greatly depending on the insurance company. It’s important to speak with your insurance company about which items are covered and which ones are not.

The value of your contents insurance will greatly depend on the value of your contents. Receipts should be kept of any new items you purchase for the property. The insurance company will also ask you to create a list of goods for your policy.

Contents cover will protect any items that you have inside of the building, and is an essential cover for any landlord that offers furnished properties.

Loss of Rent/Alternative Accommodations Cover

If your property become uninhabitable for a covered reason, alternative accommodations insurance will cover the expense of relocating your tenants.

Loss of rent insurance will cover any income lost while the property is uninhabitable. Depending on your policy and the damage, you may receive payments for anywhere between 12 and 36 months. This cover is crucial to have if you have a mortgage. Should your property become uninhabitable, you can continue making payments on time and avoid going into default.

It’s important to note that this insurance typically does not cover any loss of income you may experience in between tenancy agreements. If you are having a difficult time finding new tenants, you will not be able to make a loss of rent claim in order to cover your mortgage payments.

There are some policies that will also cover loss of rent if the tenant stops paying rent. If this is not covered under loss of rent, most insurance companies offer cover for this for an additional fee. Depending on your experience with previous tenants, you may want to purchase this additional cover to protect your investment should your tenants stop paying rent.

Liability

Liability is included in your landlord insurance policy and is put into place to protect you against any court claims or any damages made against you. If a tenant or a guest is injured while on your property, they may make a claim on your insurance policy.

Even if you are diligent in maintaining your properties, accidents can happen. Liability will protect you from costly claims and lawsuits. Standard liability insurance starts at £2 million and can go as high as £10 million. Commercial properties can be covered from anywhere between £10 million and £50 million or higher.

Malicious/Accidental Damage

Depending on your insurer and landlord insurance policy, malicious and accidental damage may or may not be covered. This is damage caused by tenants intentionally (malicious) or unintentionally (accidental).

It’s best to choose a policy that offers both types of cover to ensure that your property is protected. Even the most responsible tenants can cause accidental damage. Without the appropriate cover, you will be responsible for the cost of repairs.

Depending on your needs, you can extend your cover by purchasing additional policies. Landlord emergency cover, for example, will help cover the cost of emergency repairs and provide your tenants with 24/7 access to professionals who can make repairs.

The One Guide You Need to Landlord Insurance

Landlord insurance is a necessity when letting any property. The proper insurance will allow you peace of mind and safeguard your investment against unforeseen damages or expenses. As a landlord, it is your responsibility to obtain proper cover not only for your property, but to maintain insurance at all times. The first step is to obtain insurance and getting a quote.

Obtaining Landlord Insurance

As a landlord, it is vital to know that home insurance does not provide the same level of cover that landlord insurance offers. Instead, the cover seen will also include:

  • Loss of rent
  • Landlord liability

There will also be other coverage points not on this list depending on the policy. Since a policy will be tailored to landlords, it will provide the utmost in cover for the landlord to safeguard against any unwanted happenings.

There are a few ways to go about obtaining cover. If the property already has home insurance, it may be possible to obtain cover as an additional policy through the existing insurer. This is often an easier way to secure insurance and will allow landlords to, oftentimes, save money on their policies by having them combined.

Cover should be sought with an insurer that works primarily with landlords to obtain the lowest rates and the best coverage.

Understanding Cover

The cover offered will vary greatly from one policy to the next. There are always a few main points of coverage that every landlord needs to ensure is included in their policy. These main cover options include the following:

Buildings Insurance

Protection for the building itself. This protection will be needed for any repairs or rebuilds that need to be done. The higher the rebuild cost, the more insurance will be needed. Insurers have been offering unlimited cover options as of late which ensures adequate building cover at all times.

Contents Insurance

Oftentimes not included in a standard policy, contents insurance is a must-have, especially when letting a property that is furnished. This will cover all of the contents owned by the landlord, but none of the contents owned by the tenants. If possessions will be left inside of the property when the tenant resides in the property, contents insurance is ideal.

Malicious Damage

Damage caused directly by a tenant. If the tenant were to purposely break a window or put a hole in the wall on purpose, this coverage will provide the funds needed for a repair to be made. Malicious damage must be included in every landlord insurance policy.

Rent Guarantee Cover

In the event that a tenant does not pay their rent on time, rent guarantee cover will provide a certain, pre-defined amount, of rent to the landlord. Cover may also provide monetary funds needed to evict a non-paying tenant.

Loss of Rent

Fires, floods and other causes that lead to a property being uninhabitable will cause a landlord to lose vital income. Loss of rent cover will provide the money needed to pay a mortgage and sustain the property until repairs have been fully made.

Liability Insurance

Always included within a policy, this directly covers the expenses (often up to or exceeding 2 million pounds) caused by any liability claims.

The optimal route when choosing an insurance policy is to speak with the insurer directly to discuss the best options for your dwelling. The insurer will be able to discuss the minimum cover options you may need as well as a few extra cover options that you should include on the policy.

Responsibility of a Landlord

Landlords have a direct responsibility to their tenants. The following key responsibilities must be kept in mind at all times:

  • Landlord insurance should be sought before a tenant moves into the dwelling.
  • Covered properties that are now vacant should be alerted to an insurer. Differing cover may be needed at this time. Unoccupied property insurance will often be needed.
  • Insurance certificates may need to be furnished to tenants and banks. Copies should always be held by the landlord.

Landlords must provide a safe dwelling to tenants and ensure that insurance is present on the property.

If proof of insurance or insurance certificates are lost, obtaining new certificates is as easy as contacting your current insurer and obtaining a new copy.

Keep up to Date

It cannot be stressed enough that insurance companies must be kept up to date at all times. If a property has been damaged, a tenant leaves or a new room was added to the property, it is essential to notify the insurer immediately. Many insurers will have a notification clause that requires a landlord to notify them of any important changes within a specified time frame, typically 30 days.

Customer service and the ability to respond to claims quickly are just two of the most important factors when choosing an insurer. Always be diligent with your property’s insurance and never let a property without first obtaining insurance.

Landlord Insurance: Pertinent Information for the First-time Landlord

Purchasing a buy to let property comes with immense benefits. Steady income and the ability to supplement income are the normal reasons a person invests in property to let. When it comes time to let a property, there are a number of safeguards that need to be put into place. Not only do you want to let to tenants that pay on time and are respectful of your property, but you will also need to secure landlord insurance.

Cover for Your Investment

Landlord insurance provides cover that ensures your investment is always safeguarded. The following is often included in a standard landlord cover:

Loss of Rent

Often a percentage of the complete sum, loss of rent ensures that landlords will still receive some of their income even in the event that the property is currently inhabitable. Loss of rent cover normally does not exceed a maximum of 30 percent.

Liability

Lawsuits against property owners are on the rise. Liability charges can be extremely expensive and are often much higher than the average landlord can afford. Liability cover will ensure any lawsuits stemming from tenants, postmen, guests or anyone on the property are able to be fought appropriately. Furthermore, cover is often very high and can exceed 2 million pounds in many cases.

Accidental Damage

Unintentional damage cover that includes broken windows, holes in the walls or any damage caused by an accident may be covered under accidental damage.

Malicious Damage

Tenants, guests or trespassers may cause malicious damage to a property. In this case, malicious damage cover will ensure that landlords are properly reimbursed in the event that malicious damage occurs.

These are just the basic covers that may be included within a policy. There are many ways to add on extra cover to a property. One of the most sought after additions to landlord insurance is contents insurance. This will allow a landlord to be reimbursed for any contents that may be damaged within a property. Perhaps a tenant broke a television or ruined furniture. These are the types of items that may be covered under contents insurance.

Managing Landlord Cover Costs

The costs of landlord insurance are known to swell high at times. Oftentimes, premiums are inflated because the owner of a property takes out the highest possible cover as well as additional cover options.

The cover that is required for a property will vary greatly from one property to the next. The value of the property is the ultimate deciding factor on how much cover is recommended. For a first-time landlord, it can be difficult to determine what cover amounts are sufficient. There are a few resources that you can utilse to choose the right cover amounts.

  • Insurer: The insurer that provides you with a policy will be able to tell you the recommended amount of cover you should have.
  • Local Authorities: Minimum amounts of cover are often set by local authorities. These same local authorities often recommend cover amounts based on your property.

It is always better to have more cover than necessary than have too little cover. If cover is not adequate, out of pocket expenses will be needed to cover the difference. In the event of a liability claim, this can equate to extensive expenditures.

When choosing the right insurance provider, comparisons must be done. It is always better to shop around and find an insurer that is affordable and reliable than to choose the first option available.

Ideally, landlord insurance will be purchased from an insurer that deals only with landlord policies. This will allow for premiums to be kept as low as possible and will result in a more robust policy that never leaves off vital cover that landlords truly need.

Unoccupied Property

In the event that a property is unoccupied, it will still be feasible to take out cover for the property. This cover will likely not be a typical policy, but a policy that will cover the following:

  • Building Cover: A basic necessity. This will provide the funds needed for a rebuild in the event that the building has been damaged and needs to be repaired.
  • Contents Cover: Another basic necessity. Contents cover is a wise choice in an unoccupied dwelling where items may be damaged or stolen.

The best part about unoccupied property is that the cost for insurance will be much cheaper. The idea is to keep this insurance policy active until it is time to let the property to a tenant. Once this is done, a full policy will need to be put in place.

Whenever landlord cover is sought, it is essential to obtain a certificate of cover. This documentation will be needed by the tenant in some cases and copies should always be held for your own records. In the event that a tenant vacates the property, an insurer must be notified of the change immediately.