There are a number of policies available to the landlords of individual properties and so it follows that there are a number of considerations to make when choosing such as:
- Is the unoccupancy wording suitable or are flat owners left uncovered due to circumstances beyond their control?
- Is the letting agent acting on behalf of the property owner expected to comply with impractical warranties or conditions such as: types and percentage of occupants, inspections of unoccupied flats, inspections of flat roofs; the removal and storage of waste, or the illegal cultivation of drugs;
- Is the sum for alternative accommodation is adequate, bearing in mind flats of differing sizes?
- Is there a time limit on the indemnity period as a rebuild of a block of flats can take years?;
- Is loss of rent available to landlords?;
- Will the policy contain a Non-validation clause to prevent the policy being invalidated by circumstances outside the knowledge or control of the policy holder?
The most common insurances are as follows:
This risk area will include (or can be extended to cover) central heating, plumbing and electrical systems. Some insurers allow the tenants to phone direct to the insurers when a problem arises.
Buildings insurance does not as a rule cover the replacement of damaged contents owned by residents (except in certain circumstances). These should be covered by individual contents insurance (see below). For example, should a water leak from a leaseholder’s flat cause damage to the contents of the flat below, the items can only be replaced if both leaseholders hold current contents policies. The leaseholder who is not at fault in any way may have to claim on their contents insurance if the leaseholder from whose flat a leak occurred does not have third party contents cover. Another difficulty is that many contents policies do not even allow for third party damage cover.
However, buying a new-for-old policy at least enables items to be replaced.
This can cover all the costs in maintaining and annually checking any gas appliance including central heating system and can also include 24-hour breakdown cover.
Home Emergency Assistance/Domestic Emergencies
Home Emergency Assistance insurance policies are very useful and inexpensive insurance products, ideally suited to Landlords who need 24/7 access to a wide range of contractors, for many urgent domestic crises. It will protect against domestic emergencies that not only affect the premises, but also the safety of the tenants.
These types of policies provide cover for the costs of dealing with domestic emergencies such as:
- Boiler breakdown;
- Plumbing issues such as breakage or failure of the sole toilet unit;
- Drainage issues;
- Electrical and gas supply problems;
- Smashed windows;
- Pest control;
- Broken locks;
- Breakdown of main heating system;
- Home security, including locks and windows;
- Loss of domestic power supply;
- Lost keys;
- Vermin infestation.
Usually the type of emergency and the definition of emergency that is covered, will be specified
Landlord Contents Insurance
This type of insurance will ensure the protection of any furnishings that are left for tenants. Theft from tenants (or their guests) could result in a substantial bill for replacing furniture and electrical items. Likewise, if any furnishings are damaged by a break in then landlords need to be covered too. The assumption that standard contents home insurance will provide adequate protection is an assumption that many first-time landlords make but this is not the case.
Most landlord contents insurance policies will provide liability insurance free of charge, an essential insurance, no matter how competent the landlord.
This covers legal costs arising from disputes with tenants as well as the eviction of tenants over unpaid rent, damage to the property resulting in tenants having to be housed elsewhere and squatters.
It will also cover all legal fees and costs incurred by a solicitor who will normally be appointed by the insurer.
More information on legal expenses insurance can be found here.
Let Property Content: High Value Furnishings
This is useful for landlords that provide high value furnishings. It will protect things like the carpets, curtains, appliances and other fixtures or fittings and furnishings as well as protecting against damage caused by the tenants.
A fairly limited policy will typically give a fixed limit of around £5,000 of cover items such as carpets, curtains, light fixtures and fittings, and kitchen white goods on a new for old basis. There is no rerquirement to obtain insurance cover for any items provided by tenants who should take out their own contents insurance prior to moving into the property. Landlords can actually insist on tenants insuring themselves against accidental or malicious damage.
Loss of Rent/Alternative Accommodation
This covers the cost of providing alternative accommodation for a tenant if the property become uninhabitable or the continual payment of rent if the tenancy terminates as a result of the property becoming uninhabitable. This may however not cover loss of rent/accommodaion if the claim results from a Legionella outbreak
at the insured premises, (even if the Public Liability section has been extended to cover this disease).
A specific Legionella extension may be required although cover may be included where the policy has the ‘Notifiable Disease’ extension with some insurers listing the diseases that they are prepared to cover. The cover provided could be a reduced level of protection when compared to the main Loss of Rent sum insured and can be expressed as a shorter indemnity period with three months being typical.
Public Liability covers sudden and unforeseen events. It relates to the contents, (usually up to £5m) in the event of injuries to tenants or their guest such as loose carpets or defective appliances.
Rent Guarantee Insurance
Rent guarantee insurance provides protection when a tenant fails to make a rent payment on time. The rent is paid after a) a pre-determined period of default by the tenant, b) until the tenant pays or c) the tenant leaves.This kind of insurance requires the tenancy type to be that of an Assured Shorthold Tenancy (AST) of no longer a term than 12 months. The deposit taken is required to be equal to (or greater than) 1 months’ rent and a full tenant reference from an approved tenant reference provider must have been obtained. Fees that can be involved during an eviction process can be covered under the legal expenses cover.
More on rent guarantee insurance can be read here.
This covers against the void months when the property remains empty. It must be taken out prior to the start of a tenancy, as the insurer will ask to be involved in reference checks.
OTHER KEY CONSIDERATONS
Some of the key considerations when choosing insurance are: