As a landlord, it’s important to protect your investment and ensure that your buy to let property is properly covered. Specialist landlord’s insurance is vital to protect you—and your bank balance — from an unforeseen event that could lead to an insurance claim.
Whilst standard household insurance provides cover for your building and contents while you are living there – there are many risks associated with letting a property that your home insurer will not cover. This can, of course, result in a landlord being out of pocket following a loss. An avoidable outcome if you have the right cover in place.
An important section of the policy is cover for the building itself; the bricks and mortar, providing protection for damage to the physical structure of the building in the event of an insured loss. Buildings includes cover for the walls, roof and permanent fixtures, such as a fitted bathroom or kitchen.
Another key element is property owners liability, which provides cover for the landlord in the event that a third party makes a claim against you arising from your ownership of the building.
Landlords also have the option to cover any contents in the property belonging to you, including basic furnishings, electronic equipment, curtains and carpets.
A crucial part of any landlord’s policy is cover for any lost rental income if your property becomes uninhabitable as a result of an insured event, such as a fire or escape of water. Alternative accommodation for tenants is also included, should you need to temporarily re-house your tenants whilst your property is being repaired.
Don’t overlook it.
Your buy to let property may become unoccupied at some point, either for renovation/repairs or a gap between tenancies. Some insurers will look to restrict cover during the period that your property is empty, highlighting the importance of considering a policy that provides full cover without restriction for a longer period, such as 90 days. Also, look for a policy that will not charge an extra premium for important covers such as accidental damage or malicious damage or theft by tenants – some insurers will look to charge an additional cost.
A common reason for reporting a claim is an escape of water in the property, so consider a policy that not only has a low excess for this type of loss, but also includes ‘trace and access’ cover as standard. This covers the cost of locating the source of a leak, such as a burst pipe under floorboards or behind sealed bathroom tiles.
Get the numbers right.
It’s the landlord’s responsibility to ensure your buildings and contents are insured for the correct amount, so it’s a good idea to have your property professionally surveyed for an accurate valuation of the ‘rebuild’ cost of your building. This is the total cost of completely rebuilding your property if it was destroyed beyond repair. So, in the event of a major disaster such as a fire, you will be suitably covered without incurring a reduction in the claim payment due to the property being underinsured, known as the ‘average’ clause.
Index Linking is a provision to increase the rebuild value at each annual renewal to account for inflationary increases to building materials, labour, costs and fees.
It is intended to protect the landlord from underinsurance and the percentage level is generally calculated by RICS and the BCIS House Rebuilding Cost Index.
Index Linking is higher than usual at the moment – this is due to the increasing costs of building materials and fees. For example, the cost of timber is up by around 50% and some metal/sheet materials up almost 100%.
What’s not covered?
The policy won’t provide cover for;
- Your policy excesses
- Gradual wear and tear over a prolonged period
- Any contents belonging to your tenant
In safe hands
Should you need to report a claim, it’s important that the claim is handled quickly, efficiently and fairly. It’s valuable to have a provider who values the importance of their claims service or a broker that has delegated authority to handle claims in-house.
Cox & Co have established a partnership with a local, leading independent insurance broker that specialise in arranging landlord’s insurance.
Bruce Stevenson can provide a specialist policy that includes all the above features mentioned in this article. If you would like a no-obligation quotation, please contact your property manager at Cox & Co, or our representative at Bruce Stevenson, Graeme Durie on 0131 553 9994 or Graeme.Durie@BruceStevenson.co.uk