This time we are putting Mark Hutchings, sales and marketing director at Berkeley Alexander, on the spot with the following question:
Q: I’ve got a client who needs Landlords’ Insurance for a portfolio of different buy-to-let properties. I’ve not arranged this cover before and want to be sure of the main considerations.
A: The complexity of risks faced by landlords is far greater than those of the average home owner, and they cannot be covered with a standard home policy. There is also a wide variation in policies across the market.
A comprehensive policy must include buildings cover (and potentially landlords’ contents), loss of rent and property owners/public liability as a minimum.
It should also cover all of the normal risks that we expect from our own home insurance, including fire, flood, explosion, burst pipes, subsidence and so on. However, there are a couple of big risks that all too often get overlooked.
Firstly, malicious damage; this was highlighted recently in the media by the case of a couple in Wiltshire who despite their best efforts to vet their tenants ended up with a £20,000 bill to restore their home after it was turned in to a cannabis factory.
They received no compensation as their policy did not include protection for landlords against malicious damage.
Secondly, un-occupancy; most policies reduce the cover under the policy during a period of un-occupancy but the length of time insurers give full cover for can vary between insurers, as can the application of certain conditions such as the mains gas and water supplies are turned off, whether the central heating system remains on to prevent burst pipes and how often the empty property is inspected.
For landlords with more than one property consider insuring the entire property portfolio to give a comprehensive package at the best possible price.
The key message is to choose a policy specifically designed for let properties – don’t just rely on a home insurance that has been adapted to cater for a landlord and shop around – don’t just accept the mortgage lender’s policy.
