Landlords Insurance Top Tips

What to look for in your insurance policy?

Look at the total overall policy not just the initial cost. The excesses vary per policy and affect the premium due. Ensure that you would be happy to pay the excess in the event of a claim and if arranging it for a block, remember that not all tenants may be as careful as you so a smaller excess may be better.

Obtain a few quotes and compare like with like. Since the FSA began regulating insurance policies, it is a requirement that all insurers issue the Key Facts document up front which have a list of facts that they are supposed to provide. All insurers should supply this before you apply allowing you to effectively compare all products using the same format. This will enable you to see what cover you get for what end price.

Shop around at regular intervals. Some policies have an end date and some don’t. Always shop around at renewal time or at regular intervals for a monthly policy as new insurers are being created all the time and they are after each others business. If you have a good claims history, a lot of companies will match or better their competitor’s quotes to gain your business. Take this opportunity to reduce your premiums.

Which insurer to choose ? It is nice to go with a ‘household name’ as this gives you a sense of security that if they are well known , the policy must be OK. However, there is no reason if you find a better deal not to go with an unfamiliar name as long as you carry out a few extra checks. Check the KeyFacts document to get the name of the insurer , not the name of the broker or company carrying out the administration. You may be surprised to learn that it is a household name. If you don’t recognise the name, check to ensure that they are both authorised and regulated by the FSA and if you want to check even further, you can check this out on the FSA’s own website .

Honesty is the best policy. It may seem obvious but be truthful when applying for insurance that covers your most expensive investment. Insurance operates on the ‘utmost good faith ‘ principle whereby they will generally accept what you tell them without asking for additional proof or information. However if you have been economical with the truth e.g. by stating that all doors are fitted with mortice locks when they haven’t, this may invalidate the policy if you unfortunate enough to have to make a claim following forcible entry.

What do I insure my property for ? This is otherwise known as the Rebuild cost or Sum Insured . It is your responsibility to ensure that the property has adequate cover and it is worth noting that if your property is underinsured, the insurers will only pay out a pro rata claim i.e. if you only have insurance for £100K when it should be £150K, they will only pay out two thirds of the claim as only two thirds of the sum insured was taken out. Therefore in this case if a full claim was made, the clients would only receive £66K when they would actually need £150K to rebuild the property. !

The Association of British Insurers has a website www.abi.org.uk that may help with calculating a rebuild costs if you do not have one on a recent valuation report with it on. Other than a recent valuation report, you could instruct a Chartered Surveyor to provide one although you would have to pay for this. This is probably the one area that most people struggle as it is important but not everyone has a recent valuation. For people that wish to insure blocks of flats or more unusual properties, the standard rebuild calculator will not apply and the only safe option would be to get a Chartered Surveyor to provide a quote so an accurate amount of cover is taken out.
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