Continuing this occasional series of articles, Gwen Williams of Belvoir Bedford advises about the types of insurance available for your rented property.
Surprisingly, there are still properties that Landlords leave uninsured or under insured. Whilst these are few and far between, the risk is great and few people could afford to stand the loss. Good insurance is a corner stone for any asset and housing is no exception especially as the insurance market offers varied policies, giving suitable cover for the house and the property inside and the rent.
Buildings are normally an appreciating asset, but how often do we adjust the value of the sum insured? It is important to insure for the rebuilding cost, rather than the market value. (Rebuilding cost will cover site clearance, architects and planning fees). A good policy will work to the rebuilding cost and be index linked. Beware of being under inured as the insurance company could well deduct the under insured amount from the claim. For example, a £50K house, under insured by 20%, could result in a £20K claim being reduced by £8000, or 40%!
It is also worth checking the detail of the policy. With a normal household policy altered to cover renting, there may well be exclusions, an increased excess and an increase in premium. This is especially true of the new breed of telephone and Internet insurers who like minimal risks and simple proposals. One well-known telephone insurer will not accept tenants damage to a rented property and increases the excess by £100!
A good letting agent will have access to specialist rented property insurance and this is well worth investing in to avoid problems should a claim be made. Good policies will also offer Property Owners Liability, especially important in an increasingly litigious society.
In addition, loss of rent cover, accidental and malicious damage cover should be standard. Insurance policies offered by mortgage lenders do not always offer the best value or policy content. It is worth seeking alternative quotes from a specialist such as Belvoir.
Landlords often undervalue the contents of the property. With a furnished house, it is easy to amass £20,000 value of Landlords contents.
White goods, suites, carpets and curtains soon add up and again need to be insured to value to ensure a claim being met in full.
Even an unfurnished property will need about £4 – 10K cover to meet the replacement cost of carpets, curtains and rails and cooker. Don’t forget the labour cost of replacing any of these items.
Again, a good letting agent will provide quotes from a specialist insurer to cover against these risks, including accidental and malicious damage. Whilst the tenant is liable for damage, in the event of a flood, fire or third party damage the landlord would need to claim on his insurance.
Tenants are not excluded from rental insurance market and there are now a range of policies on the market that provide the tenant with full cover for their possessions in rented property. It is advisable for tenants to take out such cover, as the landlords policy cannot insure items owned by the tenant. Your letting agent will be able to give you a quote for your tenants contents insurance.
Rental & Legal Guarantee Insurance
These policies provide a guaranteed rent for a set period and are normally tied into the referencing that the tenant has to undergo before being accepted into a property. If the tenant passes the reference process, the insurer will guarantee the rent for a defined period. Belvoir and other good property managers will be able to provide such a policy and may even offer it at no cost. These policies will pay rent and provide or pay for the legal fees that accrue if the landlord is forced to evict a tenant. Tenants can be made redundant, be off work sick etc. If this happens, the first bill to be missed is the rent. Having rent and legal protection is as important as buildings and contents insurance in today’s rental market.
In summary, there are many insurance policies on the market, but few that cater specifically for the rental market. It pays to seek the advice of a good property manager and to ensure that you are insured to the market value.
Want to know more contact Belvoir Bedford 01234 290685 or pop in and visit us at our Tavistock Street Office.