It is vitally important to arrange the right insurance cover for your investment property as the insurance risks associated with letting residential investment properties can be very high and are completely different to that of owner occupied risks. Some landlords are arranging a normal household ‘landlord’ policy which is far from adequate. An investment property requires specific investment / buy to let All Risks insurance.
At all times make sure that the insurance company in question knows that the property is rented to tenants.
When requesting a quotation for your property, the following covers need to be included:
- Buildings Cover – All Risks basis
- Landlords’ Contents Cover
- Loss of Rent Cover – 24 month indemnity
- Liability Cover which will include injury or death to tenants and third parties visiting your property e.g. visitors, workmen etc.
You need to check if malicious damage caused by tenants is covered, how long the property can be left unoccupied before cover is restricted, are there any restrictions in cover for tradesmen or casual employees carrying out property repairs / maintenance, what special terms / endorsements apply in respect of unoccupied risks i.e. security, physical inspections, mains services, flat roof maintenance, policy excesses etc.
Many Landlord ‘Home’ Insurance policies contain a condition that an electrical certificate for the property is obtained every 2-3 years.
Also insurance companies will often ask what type of tenants will be renting your property e.g. student, professional, local authority, family, individuals etc. Some insurance companies will not provide cover for properties rented to students or AirBnB, so ensure you make your insurance company aware of any change in tenancy type or property usage.
Inform your insurers that your property has an integrated / automated fire detection system or fire / smoke alarms, fire blankets and fire extinguishers, security locks etc. as these may provide a reduction in the rate calculations.
If your property is insured under a block policy i.e. an apartment, this policy will only cover liability arising from accidents in the common areas i.e. the hallways, stairways, landings etc. It will not cover accidents occurring inside the apartment. To ensure you have liability cover within the apartment you must have (landlord’s) contents insurance, but check that it covers liability to the tenant as well as third parties.
Points to Remember:
(i) Cover provided under a landlord ‘home insurance’ type policy may not provide sufficient insurance cover for residential investment properties, despite it being labelled a ‘landlord’ product. An investment property requires specific investment property insurances i.e. All Risks cover.
(ii) Your buildings sum insured should represent the cost of rebuilding the property if it is completely destroyed including an element for removal of debris, as well as architect and surveyors fees. Protected / Period properties will have an increased cost of reinstatement, to include aspects such as maintaining the façade of the property in the event of having to rebuild it, reinstatement of period features such as bay windows, brickwork and internal features such as coving, cornices and sash windows. You cannot guess the reinstatement value of your property therefore it is imperative that you obtain a professional reinstatement valuation at least every 5 years and thereafter adjust in line with the building cost index.
(iii) Always make your insurance company aware of your property becoming unoccupied and any changes in tenancy type or property usage or if your property has become sub-let.
Remember – Don’t be swayed by the cheap premium offerings of home insurance type policies labelled as ‘landlord insurance’. Insure your investment property with a property damage All Risks landlord policy…you won’t regret it when a claim arrives!
If you have specific questions about your commercial investment property insurance cover, talk to the property insurance experts at SA Faughnan (Brokers) Ltd., who have over 35 years’ experience in general insurance…