The Landlord Law Insurance Mini Course

This short course, developed in association with Alan Boswell Group aims to de-mystify the world of insurance for rented properties.

You should also read our article on insurance, plus the following Landlord Law Blog posts may be useful:

See also this  podcast recorded with Leah Mayes of Alan Boswell Group where she discusses the various pitfalls landlords face when choosing and using insurance.

Disclaimer: None of the content in this mini-course should be considered individual insurance advice. It is intended to be general guidance only. Neither Landlord Law Services Ltd or Tessa Shepperson are authorised to give advice on insurance.

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Introduction

Introduction

Tessa Shepperson

Introduction

Hello, I’m Tessa Shepperson.  Welcome to this short course on landlords’ insurance.

Insurance is very important.  Your property is a very valuable asset – it may be the most valuable thing you own.  So if you are handing it over to strangers to look after, you need to be careful.  Anything could happen!

Most tenants will look after your property carefully and hand it back to you in good condition.  However, when renting property to tenants the risks are somewhat different from when you live in the property yourself and so you need special insurance designed for this.

Do not use your normal household insurance!

It will not cover all the risks and you may even find (if you have not told your insurers that you are renting the property to tenants) that they refuse to accept any claims at all because of this.  Always use a proper insurance policy designed for landlords renting to tenants.

About this course

Insurance is confusing and there are a lot of things to think about when choosing your cover.  This little course is designed for landlords looking to take out insurance, or maybe changing their insurance.  If this is you, you should find it very helpful.  Hopefully, it will give you all the information you need to understand what the issues are, to be able to spot problems and to make an informed choice.

It was developed in consultation with various caseworkers and staff at insurance brokers Alan Boswell Group.  Alan Boswell Group specialises in landlord insurance.  They provide insurance products for several landlord organisations as well as many individual landlords.  They take pride in giving cover which is as comprehensive as possible and in providing an excellent service.

Of course, this does not mean that your insurer (if you do not use an Alan Boswell Group product) does not a provide good service too!  Alan Boswell Group is not the only quality insurance product on the market by any means.  For example, Hamilton Fraser Insurance and the Stride Insurance Group both specialise in landlords insurance and, I understand, have a good product.

However, there is a lot of variation between policies.  After reading this course you may want to carry out further enquiries, and possibly make changes to your cover.

About Alan Boswell Group – and the Price Beater Guarantee

I am extremely grateful to all the Alan Boswell Group staff who helped me with the development of this course and I would like to thank them for answering all my questions so patiently.  Although I am a lawyer I do not have a background in insurance work, so I sometimes had to ask a lot of questions before I got things straight in my head!  Any errors in the course are down to me alone.

Naturally, the Alan Boswell Group staff were only really familiar with their own service and so there are a lot of illustrations and examples of their way of doing things in this course.

If as a result of reading the course you decide to give Alan Boswell Group a try-out – note that they have a ‘Price Beater Guarantee’  offer you can read about here or via logo buttons elsewhere on the course pages.

I should probably mention here that if you do this, and your signup is tracked to me (Tessa Shepperson), I will get a commission.  However, this won’t affect the premium you pay or make it more expensive.  If you are happy for us to have a commission please be sure and sign up after clicking one of the Alan Boswell Grop Price Beater Guarantee links.

Using this course

You can open and close the sections in the course by clicking the white arrows on the right in the blue bars.  You can also click and unclick the white circles on the left which will add or remove a tick.

This course first appeared on the Landlord Law Blog where the course was ‘dripped’ out to users over four days.  However, with this version, you can see all the content at once.

I hope you enjoy the course!

Please go now to the first part which is on the things which need to be covered by your policy.

Tessa Shepperson

Disclaimer: None of the content in this mini-course should be considered individual insurance advice. It is intended to be general guidance only. Neither Landlord Law Services Ltd or Tessa Shepperson are authorised to give advice on insurance.

The Insurance Mini Course

Part 1 – Insurance Cover

Welcome to this first part of our Insurance Mini-Course.  In this part we are going to be looking at the type of cover you will need as a landlord.

But first:

Do you need to have insurance at all?

Technically no. The only insurance actually required by law (ie it’s an offence not to have it) is car insurance and employees liability insurance.

However, most mortgage companies will require landlords to insure properties as a condition of buying the property. Also, your property will undoubtedly be one of the most valuable things you own – so it would be foolish not to have it properly insured.

What sort of insurance do you need?

You need to have insurance which is specially developed for landlords. Ordinary household insurance won’t do.

If you have a mortgage, your mortgage company will probably give you a list of things, known as  ‘perils’, that the insurance will need to cover. This is likely to include things like:

  • The buildings financial insurance to be for a sum that they set (which will vary depending on the value of the building)
  • (Sometimes) Terrorism cover – mostly in London
  • Malicious damage by tenants
  • Loss of rent and alternative accommodation
  • Subsidence

We will be talking more about all these as we go through the course. Sometimes the apparent meaning of these terms and how the cover works is not what you might think.

So, let’s have a look at the various things which can (and should) be covered by your landlord’s insurance policy.

Loss of rent

I became very confused when the Alan Boswell Group staff explained this to me as it does not work as you would expect.

– It is NOT the same as rent guarantee insurance. Rent guarantee insurance will cover you for non-payment of rent by tenants but not loss of rent due to tenants being unable to live in the property due to damage.  You get this with your buildings insurance cover.

How it works (for the Alan Boswell Group policies anyway) is as follows:

  • There will be a sum of money available under your policy which is the maximum payout. This will normally be a percentage of the total sum assured. So it could be 20% or 30%.
  • You will claim every month for what your actual loss is. This will be the rent that you would have got from your tenant. Or the cost of re-housing them in alternative accommodation (up to the monthly value of the rent), but not both. Whether you are liable to pay for your tenants’ alternative accommodation (or more likely, the extra cost over and above their rent) will depend on the terms of your tenancy agreement.
  • So normally you will get the all actual rent you have lost as part of your claim under the insurance.  However, if the property is in serious disrepair and the property is uninhabitable for a while, then if the cumulative value of the rent you claim is more than the maximum payout sum – then once the maximum payout sum has been reached, you won’t be able to claim any more.
  • You can claim for loss of rent until the property is ready to let again. Or until the maximum payout figure is reached.

The maximum payout sum is normally far in excess of what you will actually need so it will be unusual for this sum to be reached. But you may want to check – when choosing your insurance – what this percentage is going to be.

Malicious damage by tenants

Not a lot of insurers include this automatically, so if you want it you may have to request it. It is included automatically with Alan Boswell Group’s landlord insurance policy.

If at all possible you should choose a policy which covers this as losses can be very high. For example, if you rent to criminals who convert your property into a cannabis farm.

We will be looking at this topic further in lesson 3.

Subsidence

This is another peril where claims can be high – so you need this cover – apart from the fact that it is required by almost all mortgage companies.

You would have thought that risk of subsidence is something that would be shown up by your survey before purchase. However, I understand that in some cases, for example, if you are buying without a mortgage, a detailed survey is not always required. In which case you may have a nasty surprise a few years later! Make sure you are covered for it.

Accidental damage

This is a very common claim, although watch out – some insurers exclude it.

It is generally defined as damage which is caused by unforeseen or unintentional circumstances, although different insurers define it in different ways so you need to find out what YOUR insurers mean by this – if it is included.

The definition used by Alan Boswell Group is that it is “unexpected physical damage caused suddenly by an identifiable external means”.  So for example

  • if the tenant is decorating and they put their foot through the ceiling or if whilst clearing out the gutters they accidentally damage the building,  Or,
  • if the tenant puts a hot pan down on the kitchen counter or drops something into the bath causing damage (this is very common for fibre-glass baths).

Basically, it is something they do accidentally which causes damage to the buildings or the contents (ie carpets, curtains, fixtures fittings and white goods).

It won’t apply to the tenants’ own possessions of course as these cannot be covered by the landlord’s insurance.  Tenants need to obtain their own cover.

The phrase ‘identifiable means’ means that the cause of the damage can be determined and it is not ‘wear and tear’ over the years.

Other insurers may deal with accidental damage differently – you need to ask them about it.

Fire, flood, etc

FloodZone-250This is things like fire, flood, lightning, aircraft explosions, earthquakes. ‘Act of God’ type events which normally come as standard with all policies.

So far as flooding is concerned, this will normally be available unless your property is in an area which is particularly prone to flooding. For example, if the property is built on a floodplain which is regularly flooded in the winter.

If your property is prone to flooding or is in a designated flood area – it is essential that you check this with your insurers. You do not want to be without cover.

Voids / unoccupancy

This is one reason why a domestic policy is unsuitable for landlords. If you are renting out property there will often be periods of time when the property is empty between tenants. These are known as ‘voids’ and it is important that you have proper cover during them.

You need to check how many days when the property is unoccupied are included by YOUR policy. Ideally, it should be 90 days (as provided by the Alan Boswell Group insurance), but many policies only offer 30 to 60 days.  Some may only allow 14 days.

You need to keep your insurers informed if the property is unoccupied.  If it looks as if the property is going to be empty for more than the period covered, see if you can negotiate an extension.

That’s all for part 1 of this course.  In the next part, we will be looking at conditions and fees.

Part 2 – Conditions and fees

HorrifiedWomanIn this section, we are going to be looking at the things you need to watch out for when taking out insurance.  There are often hidden fees and exclusions that will surprise you.

Let’s look first at:

Exclusions

Are you aware that some insurers exclude cover for certain categories of people?

Mainly these will be students, people on housing benefit, and asylum seekers.

The problem with this is that people’s circumstances change.  If, for example, your tenant loses his job and goes on benefit or if he decides to go to college and become a student – how will your insurer deal with this?  Will they refuse to continue with the cover?  If so, you will need to arrange insurance cover elsewhere with a company which allows them.

You also need to find out what will happen if your tenant becomes a student, or lose their job and go on benefit, without telling you (as may often happen).  Will your insurers still cover you?  Some won’t.

A justification insurers may give for refusing cover even if you were unaware of the change is that you should have discovered this during your regular inspections of the property.  So if your policy carries these exclusions make sure that you check up on this regularly.

If you decide to go with an insurance company which excludes cover for certain types of tenant you can protect your position to a certain extent by inserting a clause in your tenancy agreement requiring your tenants to notify you, for example, if they claim any form of benefit or become a student.  But have a conversation with your insurers about what they will do if this does not happen.

NB So far as Alan Boswell Group are concerned, they will not normally exclude tenants just because they are in receipt of benefit or are an asylum seeker or student – so long as they are properly referenced and have an initial six months tenancy agreement.  However, there are certain types of tenant, for example, tenants with addictions (current or recovering) or with certain unspent convictions such as arson who would need to be referred to the insurer.

Always ask prospective tenants if they have a criminal record so you can check up on this.  The best way to do this is to have it in your tenant’s information form that you ask them to sign when applying for the property.  If they get annoyed about the question just say it is a requirement of your insurers.  If they lie when answering, your insurer should not penalise you so long as you can show that you asked the question.

HiddenFeesx250Hidden fees

Another thing you need to watch out for is insurers charging unexpected fees.

All fees should be set out in the insurance terms and conditions. However, if you have not read this properly you may be in for a shock.  Chargeable circumstances can include:

  • Changing your method of payment
  • Changing the named tenants in the property
  • The sum insured increasing for some reason
  • Making an extension to the property
  • Having an amendment to your policy (for whatever reason)

So when taking out insurance you need to watch out for these. Or ask your insurance broker specifically about fees and ask them to set them out for you in a letter or email.

You should find details in the information provided before you sign up and fees should also be set out in the terms and conditions. These are very boring documents but you must read them!

Note that if you are being charged these fees and can prove that you were NOT informed about them in advance – you may be able to challenge them, and maybe even refer them to the Ombudsman.  However, in most cases you will have been informed – you just did not read the paperwork properly.

Excess

The excess is the sum you pay towards the costs of a claim before your insurance kicks in.  So if the cost of repair is £600 and your excess is £250 you would pay the first £250 and your insurers the rest of the claim.

This amount of the excess can vary according to the postcode of the property and also to the peril being covered.

So there will be a standard excess. For example, the Alan Boswell Group standard excess is £250.  Then, for other types of claim, there may be a higher excess such as £1,000 to £3,500.

The types of peril that carry a higher excess can include:

  • Subsidence: This has a higher excess fee as the payouts can be so high. However, this is a reason for making sure you have this cover!
  • Escape of water: this type of claim is becoming more common and some insurers (not Alan Boswell Group) are now imposing a higher excess.
  • Flooding: There is now government protection in place to allow domestic insurance policies in areas prone to flooding. This is not available to private landlords. However, Alan Boswell Group has an arrangement whereby they can often provide cover to landlords in this situation but there will (as you would expect) be a higher excess. Probably in the region of £1,000 – £2,500.
  • Malicious damage (discussed in the next part of this course)

Generally, the excess sum should be set out in the schedule of insurance. Again, you need to be clear about what this is going to be before you take out the insurance policy.

Premium ‘loading’

Note by the way that if your property is in an area where insurers have historically paid out large sums for subsidence or flood damage claims (which will be flagged up when they input your postcode) there may be an automatic ‘loading’ (ie increase in the premium) by, say, 20% or 30%. You may want to ask about this when getting your quotation.

Try not to invest in properties which are built on floodplains or which are historically subject to flooding!

Building CostThe sum insured

This is something that has caught out many landlords.  When you insure your property it is important that the sum insured is correct.

For example, if you are insuring the building, this will (in most cases) need to be the cost of rebuilding the property rather than its value on the open market.

This is really important as it will affect the payout if you make a claim.  Contrary to what many people think, the payout will reduce if the sum insured is too low – even if the claim is less than the sum insured.

For example – say the cost of rebuilding your property is £50,000 and you insure it for £25,000.  Say you have a claim for water damage and the cost of repair comes to £6,000 (after the excess).  As you have underinsured by 50%, your claim will also be reduced by this amount – so you will just get £3,000 rather than the full £6,000.

Also, problems can arise if you are insuring a property where, such as with a flat, you do not need to insure the building.  Be aware – you will still need to cover things such as plaster, flooring (e.g. laminate floors and carpets), decorating, kitchen and bathroom fittings, as well as the furniture.  Be careful.

If you are not sure what the sum insured should be, speak to your broker.  They will advise you.

Note that so long as you get the sum insured correct when you first take out your policy, you should be alright later as most insurers will adjust this on renewal in accordance with the various inflation and price indexes.  Although there is no harm in checking with your insurer to make sure this will happen.

In conclusion – and a warning!

Some of the things here will apply to all insurance policies – for example, there will invariably be some sort of excess and you need to be careful about the sum insured for all insurance.  However, the number and extent of the charges and fees will vary from one insurance policy to another.

You should always be told about them in advance but often people don’t read the paperwork sent to them and so these things may come as a nasty shock later.

You need to be especially careful about signing up, particularly with one of the cheaper insurance companies, when you have done everything over the phone.  They will send you documents but you need to check them, to make sure the policy meets your needs. You will be able to cancel the policy later on, but it is likely you will incur costs (e.g. a pro-rata premium and potentially cancellation fees).

You will be deemed to have read this paperwork if the insurance goes ahead. Do not assume that the person you spoke to on the phone told you everything. In some cases, they may be more interested in their commission than full disclosure of any negative aspects which could put you off their product!

I’m going to look next at claims related to malicious and criminal tenants.

Part 3 – Malice, Crime and Tenants

By ‘malice and crime’ I mean claims which are based on the conduct of your tenant. Probably the most expensive of these come when a property is converted to a cannabis farm.

Cannabis plantsCannabis Farms

This is where a criminal gang take over control of your property – either by renting your property as tenant or by taking over from the named tenants.

Typically they will then gut the property and instal equipment allowing them to grow as many cannabis plants as possible.  Needless to say. this will do enormous damage to your property which will be expensive – very expensive – to put right.

For example, the problems you will face after getting a property back from cannabis growing tenants will usually include:

  • The contents and floors stripped
  • Soil stored under the floorboards
  • Wiring cut into to bypass the electricity meters (NB this can create a significant fire risk)
  • An irrigation system installed
  • A heating system installed
  • Generators installed
  • Damage to the property walls due to the installations
  • Widespread mould, residue, and damp as a result of all this

The staff at Alan Boswell Group tell me one of the highest claims they have ever had was where a property was converted to a cannabis farm – the final figure came to nearly £80,000!  Although the cost usually averages between £20,000 and £30,000 – still a considerable sum.

This is not an uncommon problem either, so don’t think “It can’t happen to me”.  It could.  Although there are things you can do to protect your position.

Protecting yourself from the criminals

The most important thing is to check ALL applicants very carefully.  You need to:

  • Do ID checks,
  • Get a credit reference done by a reputable company (for example Experian or Tenant Verify),
  • Double check all the information provided, and
  • Check out the applicants online

You should also meet all applicants personally before renting property to them.  How do you feel about them?  If you feel uneasy or something bothers you, it may be best to rent to someone else.  Your ‘sixth sense’ (which is often right) will be warning you.

See also our article on checking and referencing tenants, and the Landlord Law Blog posts here and here.

You need to be PARTICULARLY careful where tenants:

  • Offer to pay the whole of the rent in advance, particularly if this is in cash, and
  • Seem to want you to stay away from the property

If they are going to convert it to a cannabis farm, they won’t want you anywhere near it! In fact, if you make it clear to all applicants that you will be conducting regular inspections, this will put potential cannabis farmers off.  So make sure you say you will be doing this – and then do it!

A property can be stripped internally and two crops of cannabis grown and harvested in as short a period of time as six months.  So don’t leave long periods of time between inspections.

You can find out more about property inspections in our special Property Inspection Kit (Business Level members only)

Be aware also that criminals looking for properties to convert to cannabis farms will also sometimes get ‘respectable’ people to apply to be the tenants.  Once they have signed up and got the keys, the criminals will move in and the ‘tenants’ move out. No doubt having been well paid.

If you are unlucky enough to have one of your properties converted to a cannabis farm – you will want to have proper insurance cover as the cost of rectification can be enormous – you may even be forced to sell the property to cover the repair work.  So make sure you speak to your insurers about this.

NB There is an excellent article by Ben Reeve Lewis on the Landlord Law Blog here which you should read about cannabis farms.  Ben also took the photographs below which are of an ordinary three bedroomed house which had been converted.

Cannabis farm

Malicious damage

It is also not unknown for tenants to deliberately damage properties if they are annoyed with you.  It is difficult to prevent this – other than by choosing good tenants who are unlikely to behave in this way.

For example in the Real Life story here, the tenant left the taps running in the bath when he left the property.  Fortunately, my client suspected something like this might happen and got in and turned them off before much damage had been done.  But this sort of thing does happen.

A big excess

These sorts of claims are almost always subject to a larger excess than standard claims – probably in the region of £1-3,000.  However, this should be covered by your tenancy deposit.  This is one reason why taking a tenancy deposit from tenants is a good idea.

Ensure terms and conditions are in your tenancy

Finally, if there are conditions in your insurance policy – you need to tell your tenants about them.  So that if, due to their conduct. you are unable to make a claim or your premiums go up – you will be able to claim against them for this, for example out of their deposit.

This will normally mean providing them with either a copy of your insurance policy terms and conditions or with an extract of the relevant parts.  Otherwise, you cannot expect them to know what things are required or prohibited under your insurance, and any tenancy agreement clause requiring them to comply will be void.

The other way of dealing with this is to ensure that all the things required by your insurers are included in your tenancy agreement anyway.  In that case, you will not need to give them a copy of your insurance terms and conditions as they will already be bound by the same things under the terms of their tenancy agreement.

It does not matter which way you deal with this, so long as you do deal with it!

In the next part we will be looking at claims.

Part 4 – Making a claim

Claims-250You hope it won’t happen to you, but if you are a landlord for any length of time, at some stage you will probably find yourself making a claim.  It is at this time – when it is too late to do anything about it – that you discover how good your insurance policy really is.

What you want

What you want is a company which deals with claims promptly, gives helpful advice, and does not try to ‘wriggle out’ of making payments by relying on a technicality.

However, unfortunately, this may not be what you get, if you have not been careful with your choice of insurer.

You also want the people who deal with your claim to be based locally, or at least based in the UK.  This will often be a stressful time for you, so you won’t want to be dealing with overseas claims handlers who (however nice they may be personally) may struggle to understand you, have no real understanding of local conditions and are working to a script.

For example, at Alan Boswell Group (who are insurance brokers), they oversee all claims themselves on behalf of the insurers and often have delegated authority to deal with claims up to a certain value.  So their staff will be able to provide help and support – for example in dealing with loss adjusters.

Emergency repair worksEmergency works

Landlords sometimes wonder what they are supposed to do if something happens (as it usually does) over a weekend or bank holiday when the insurers’ offices are closed.  Can they arrange for emergency work to be done?

The answer is almost certainly YES.  Your insurers will normally want you to mitigate your loss and you won’t be penalised for trying to stop the problem and prevent further damage.

However, this just applies to the immediate urgent work, not to major works. So arrange for emergency action and take photographs of everything (and maybe a video).

Then wait until you can speak to your insurer’s claims department.

Making a claim

The most important thing to do is provide full information and do what your insurer asks!  Frequently delays are due to landlords failing to provide the required information.

You will normally need to get quotes and submit these with photographs. Your insurer will then need to approve the works before they can start. Do not do work (other than emergency work) until approval has been granted.

If your claim is likely to be over £1,000 you will probably need to submit two estimates. Often delays occur when landlords are trying to find suitable tradesmen to do the work. However, your insurer’s claims department may be able to help by recommending suitable tradespersons.

Be aware though that some insurers will require you to use their own contractors or people on their approved list.  Or maybe they will allow other contractors to be used but with an increased excess. You need to check this with them.

When claims are rejected or reduced

It is not unusual for insurance companies to reject claims. Obviously, you want to be sure that this never happens to you.  Here are some possible reasons why your claim could be rejected or reduced:

  • You may not be complying with a condition in the insurance – for example, the tenant may fall within a prohibited class of persons – such as students (if your policy excludes lets to students)
  • The loss or peril may not be covered by your policy.  As discussed earlier this course.  For example, your policy may not cover malicious damage by tenants.  Or the damage may be considered to be down to ‘fair wear and tear’.
  • Your claim may be reduced if the sum assured is too low – as discussed in part 2.
  • You may not have complied with the terms of your policy.  For example, you may have commissioned repair works without authorisation with a contractor who is not on your insurers approved list (if they require contractors to be on an approved list). Or you may not have carried out property checks and inspection visits which could have prevented tenants from converting your property into a cannabis farm.  Most insurance companies will expect you to visit the property at least every six to 12 months.
  • You may be found to be making a fraudulent claim

Fraudulent claims

The main thing to say here is ‘don’t do it’.  If you are found to have been fraudulent in any way in your dealings with your insurer, then this will void your policy and you will be asked to repay any money paid out to you.

You will also find it hard to get insurance cover elsewhere.  Plus, in serious cases, you could be prosecuted and if found guilty, fined or even sent to prison.

So don’t do it!

Types of claim

Here are some of the most common claims that occur:

Leaky PipeWater damage claims

Probably the most common type of claim is for water damage, so let’s take a look at this first. Typically a pipe will have leaked causing damage to ceilings, walls and the property contents.

You need to be aware here that the claim will cover the damage which results from the burst pipe but NOT necessarily repairs to the burst pipe itself.  The claim will probably cover getting to the pipe concerned (as this will often be necessary to deal with the damage), but you will probably have to pay separately for the cost of actually repairing or replacing the pipe – although usually, this will not be a large sum.

The reason for this is that pipe damage is normally considered to be a wear and tear maintenance issue and your insurance will not normally cover this.

One of the problems with leaking pipes is that the problem is often completely unforeseen because the pipes are mostly concealed in the structure of the building. It is something which is difficult to protect against.

However, when the property is unoccupied there will usually be conditions in the policy to turn off the water and at certain times of the year, you may also be expected to drain down the system. You should also maintain the heating if the property is unoccupied to prevent burst pipes due to cold weather, and make sure also that your tenants keep the property properly heated in the winter.

Have a word with your insurers and see what requirements they have.

Theft of metal and copper pipework.

This loss generally happens when a property is unoccupied.  So if your property has been unoccupied beyond the period allowed by your policy (which can vary between 90 days and 14 days) you may be without cover for this loss.  As most policies provide reduced cover during this period.

Malicious damage by tenants

We discussed claims for conversion of properties to cannabis farms by criminals in part 3.  Here we are looking at other types of malicious (or other) damage by tenants.

Not all policies cover this, and where it does, be aware that it will not cover you for damage done due to the lifestyle of the tenant or their neglect of the property.  So damage done by lack of cleaning, care, and pet damage will not be covered – no insurer will cover you for the tenant lifestyle.  You need to deal with this by taking care in who you allow to rent your property and by having a sufficient damage deposit to deal with any damage that might occur.

Regular inspections of the property will also help reduce tenant lifestyle issues.  Most insurers will expect you to visit the property every six months to a year and if it is unoccupied, every seven days.

A claim in this category must be for a malicious attack on the property, which means that you should also report it to the Police.

You can find out more about property inspections in our special Property Inspection Kit (Business Level members only)

Tenants’ claims

Problems often occur when tenants possessions are damaged, for example by water damage, and the tenants do not have their own insurance.  They will often expect the landlord to reimburse them and may get angry when this does not happen.

It is important therefore that you inform tenants from the start that you cannot provide cover for their possessions and urge them to get their own contents insurance.  This can also usefully be set out in their tenancy agreement.

Note though that you cannot REQUIRE tenants to take out insurance, and any clause in your tenancy agreement requiring this will be void under the Unfair Contract Terms rules, and will put you in breach of the Tenant Fees Act 2019.  You also need to be careful about recommending specific policies as if there turn out to be problems with the cover, you may be in difficulties.

The cost of most tenant’s policies is fairly low, particularly if they don’t have many possessions.  The main benefit of the insurance for the tenants is that it will cover the cost of re-housing them temporarily if the property becomes uninhabitable (unless this is due to them!).

Note that Alan Boswell Group provides tenants insurance which you can read about here.

Liability claims

These are claims where there has been some form of negligence on the part of the landlord. Payouts here can be very high – for example, imagine a situation where a child falls out of a window and suffers injuries which result in their being paralyzed. This could be a massive claim.

The liability cover will normally cover claims by tenants, their guests (including people like postmen walking up the garden path to make deliveries) and even trespassers.

Hopefully, this sort of claim will never arise with your property, but you need to find out what the public liability limit is for your policy and also whether it covers you for employer’s liability – ie anyone who works for you eg by doing work on the property. Many landlords policies just cover you for the public liability but not the employer’s liability.

A normal public liability cover will be £2 million. Alan Boswells Group’ cover is £5 million – and this covers employers liability also.

Conclusion

This is just a general overview and does not include an exhaustive overview of all types of claim or all the procedures.  It is just a guide and you need to speak to your own insurers about this.

The important things to remember are:

  • Be aware of any limits in your policy cover
  • Follow any rules or conditions in your policy at all times
  • Make claims promptly and do not do any unauthorised work save for urgent remedial work
  • Take photographs of any damage
  • Follow the instructions given by your insurers’ claims staff and work with them

If you do that you should be all right if you need to bring a claim.

Part 5 – Choosing your insurance

ChecklistWelcome to this final part of the insurance mini course.

We have now covered all the main areas, so it just remains for me to wrap up the course by giving you some final guidance and checklist for when looking for insurance.

Let’s have the checklist first:

1. Does the insurance cover all of the following:

  • Buildings and contents
  • Automatic cover for carpets, curtains, fixtures, fittings and all white goods
  • Fire, flood, etc
  • Loss of rent and alternative accommodation
  • Terrorism
  • Malicious damage by tenants
  • Subsidence
  • Accidental damage
  • Public and employers liability

Further to these:

  • What is the maximum payout for the loss of rent element?
  • What is the insurer’s definition of accidental damage?
  • Are you in a flood risk area and if so are you covered?
  • How many days are you covered for voids / unoccupancy?
  • What is the limit for liability claims and does it include employers liability?
If you are a ‘leaseholder landlord’ read this article on the Landlord Law Blog on problems with freehold and leasehold insurance.

2. So far as conditions and fees are concerned:

  • Are any classes of person (eg students) excluded from cover and if so which?
  • If so, what happens to your cover if a tenant falls into one of those categories without your knowledge?  For example, if they become unemployed.
  • Ask for a list of all fees and the circumstances under which they will be incurred
  • Find out what the general excess figure is, and
  • If there are any higher excess fees for specific perils – and if so what the perils are and what the relevant excess fees are
  • Is there any ‘premium loading’ for your policy due to your postcode?
  • What is your sum assured – is it sufficient?  Have you included everything which needs to be covered in the calculation of the sum assured?

Make sure you read carefully all the paperwork provided to you – you will be able to cancel the policy later on if need be, but you will incur costs – e.g. a pro-rata premium and potentially, fees.

3. Damage by tenants

  • Does your policy cover you for tenant damage caused by converting your property to a cannabis farm or the like?
  • If so are there any conditions?
  • Have you made sure that your tenants are bound by any conditions set out in your insurance policy terms and conditions?

4. Claims

  • Does your insurer have a UK based claims team?
  • What is the procedure for making a claim and are there any time limits?
  • Are you entitled to arrange for emergency remedial works, for example, if the problem occurs over a weekend?
  • Can you use your own contractor or do you have to use someone from their approved list?

Here are some

Things to remember about insurance

  • You must be honest and not conceal anything when applying for insurance or when making a claim or you can void your policy
  • You need to be aware of any conditions and procedures you need to follow and ensure that you do so
  • You must keep your insurers informed of any relevant changes to your situation and in particular, keep them informed if the property is unoccupied
  • You must follow any guidance and instructions given by your insurers and their claims handlers at all times.

Finally, good insurance companies will want to work with you and provide a good service.  They will not want to rip you off, as they will want you to remain with them for many years as a customer.

However, all insurers are running a business and so cannot afford, long term, to pay out more in claims than they get in via premiums.  So if you want to keep your premiums down, you need to keep your claims down and behave in a responsible manner.

If you do this and if you use a reputable insurance company, such as Alan Boswell Group, you will find making claims considerably less stressful, and you should have a good experience over-all with your insurance.

5.Our downloadable checklist

We have developed a little checklist which you can print off and complete when researching for a new insurance product.

If you would like to speak to Alan Boswell Group about their insurance cover and trial their ‘price beater’ guarantee >> click here.

Disclaimer: None of the content in this mini-course should be considered individual insurance advice. It is intended to be general guidance only. Neither Landlord Law Services Ltd or Tessa Shepperson are authorised to give advice on insurance.