Choosing Buy-to-let Property Insurance
Risk is an area often overlooked by landlords, but failing to protect the main assets of your business, which often have borrowings secured against them could lead to ruin.
Landlords often fail to understand the types of insurance risks that they are exposed to and are unaware that insurance coverage for buy-to-let investments is very different to the standard household insurance policies that cover owner-occupied dwellings.
Therefore, landlords are advised to seek the services of specialist insurance companies catering for the buy-to-let market.
Essentially there are five broad categories of landlords insurance:
-- Landlords buildings insurance
-- Landlords contents insurance
-- Emergency assistance
-- Legal expenses insurance
-- Rent guarantee insurance
Landlords buildings insurance
These are the core policies and will generally provide coverage for a number of perils including fire, flooding, burst pipes, malicious damage and owner's liability.
It is worth checking the policies of each insurer as the perils covered may vary. Other issues to be aware of are the amount of money the insurance company will pay out in the event of damage occurring, types of tenants (student tenants are perceived to be higher risk) and consent to let from your mortgage lender, as failure to gain consent will render your insurance void in the event of a claim.
Landlords contents insurance
Many landlords insurance specialists will offer the option of limited or full contents insurance.
Limited contents policies are designed for properties that are let unfurnished or part furnished. A typical policy would provide cover of up to £5,000 for items such as curtains, carpets, white goods and light fixtures. Most policies will also provide employers and landlords liability cover in relation to these products.
Liability cover is important, as the number of personal injury claims relating to contents has risen at an astonishing rate since the 1990s, with awards in excess of £100,000 not uncommon.
Full contents policies are for fully furnished properties or for limited contents that would cost more than £5,000 to replace. When applying for full contents insurance, ensure you value the contents for the cost to replace them, opposed to the actual value that you think they are worth.
Cover is provided for general property emergencies, such as failing electricity supplies and cooking facilities, plumbing problems, leaking roofs and guttering, and damage to doors and windows.
Typical policies will provide parts and labour up to a specified cost, along with a 24-hour call out helpline number.
This sort of insurance is most suited to landlords who do not live near their property and have not contracted their managing agent to provide such a service.
It should also be noted that these policies only cover emergency call-outs and are not a general repair service required through lack of routine maintenance.
Legal expenses insurance
Problems can always occur with tenants and in many cases it is a change of personal circumstances such as job loss, accident or illness that will affect the tenants ability to pay rent or look after the property correctly.
Resolving such situations will usually involve expensive legal costs, sometimes running into thousands of pounds and legal expenses insurance is generally recommended.
Rent guarantee insurance
These policies guarantee that rent is received regardless of the tenants personal circumstances or ability to pay. These policies are most useful for landlords who have a mortgage on the property and are relying on the rental yield to service the loan. Policies will often guarantee rental payment for periods of six or twelve months.
It is always advisable to shop around for insurance and understand what each policy provides. Always ensure that the insurance provider is a member of the General Insurance Standards Council (GISC) and is fully regulated by the Financial Services Authority (FSA).
Please note that this article is for information and guidance purposes only. With all financial matters you should seek professional advice with respect to your own specific circumstances.
Don Suter is Managing Editor of the UK Property Portal (http://www.ukpropertyportal.co.uk), an online directory and magazine for UK property sales, rental, surveyors, mortgages, conveyancing, property insurance, removals, news, investment and development
We Dont Need Another Broker: How To Get The Best Liability Insurance Rates Available
Some business relationships are forged through blood and friendship. When you work for a company whose owner has a brother, sister, or best f...(related: Insurance)
Why Should You Shop Around For Auto Insurance?
How do you know if what you are paying for your insurance is a good deal? What is a good deal? Is choosing the cheapest company the best way to go? Does buying from the ...(related: Insurance)
How To Shop For Individual Health Insurance
If you find yourself in the position of shopping for anindividual health insurance policy, there are certain thingsyou'll want to keep in mind. Whether you are coming out of a job that covered you before, or are at the end of yourCOBRA benefits, or simply have never had coverage beforethere are things you can do to get coverage on yourself andyour loved ones.The basic thing to know is that if you have a shot a grouphealth insurance, whether through a job or an association you're a member of, that is usually much more affordablethan buying individual health insurance on your own. Firstyou need to figure out your health insurance goal...(related: Insurance)
Factors That Affect Your Car Insurance Premium
Many factors affect the premium you will pay for auto insurance. Each is a statistically based risk for a specific population. The higher the risk associated with a person, the more he or she is likely to pay for coverage. We have elaborated on some of the risk factors below, but there are numerous others, including driver's gender, miles driven per year, purpose for using ...(related: Insurance)
5 Steps To Cheap Car Insurance Premiums
Although car insurance is compulsory, it's not necessary to pay more than you have to. A few simple steps combined with some time surfing for competitive car insurance rates really can save you hundreds.Step 1 - Cut the Insurer's RiskThe easiest way to cut your...(related: Insurance)
Life Insurance Providing Little Protection From Terrorism
Recent statements by the City of London Police Commissioner James Hart that future terrorist attacks in London's financial centre are, "a matter of when, rather than if", will increase already serious concerns over issues of personal and business financial protection.Mr Hart's statement pointed out that, "if you want to hurt the government, hurt people at the same time, and you want to cause maximum disruption...where better to hit than at the financial centre?"Mr Hart also echoed a report by the insurer Axa which warned that just under 50% of small firms do not have a plan in place to ensure that their business could survive should they be hit by an emergency or disaster. Axa highlighted that many businesses, especially in the South East danger zone, are not even covered against genera...(related: Insurance)
What Is Health Insurance?
What is health insurance and why do I need it? Health insurance protects you and your family from a financial hardship due to medical expenses in the untimely event tha...(related: Insurance)
How To Take The Guesswork Out Of Buying Term Life Insurance
Protecting your family is the single most important thing any individual can plan for during his or her life. Buying life insurance can be confusing, and a frustrating process. As an insurance agent, I am well aware of the details a customer must know to make the decision easier. In this article, I will offer practical advice on how to simply purchase life insurance.Look for a company that has at least an AA-rating or above. Independent agencies such as Moody's and Standard & Poors rate insurance companies on financial strength., there's little or no difference in two companies with the same exact financial rating. You should feel comfortable with any company that has an AA or higher rating....(related: Insurance)
Student Health Insurance - Is It Necessary?
As a young, healthy college student, it might be tempting to forgo the expense of health insurance. After all, you're young, you're careful and you're not sick. You don't real...(related: Insurance)
Tips For Lowering Your Auto Insurance Quote
Do you have many claims? If so, you should do all you can to reduce them or even endeavor to file no claims at all. Why do I bring this issue up in an article about lowering your auto insurance quote? Because the number of claims is the single factor that to the highest degree influences the cost of your insurance premium. Let me give you an example: Let's say you have 5 years of no claim. Most companies will then give you an unbelievable discount of your premium, some of them even 75%! It goes without saying that this is the most powerful way to get che...(related: Insurance)
Why Should I Go To A Life Insurance Broker?
A life insurance broker is a dedicated person that encourages and listens to the needs and wants of a person looking for life insurance. It doesn't matter what type of life insurance you are looking for, whole or term life. A broker will be able to find suitable rates for you to choose from. When you contact a life insurance broker, you can get the life insurance you need from a company in another city or state that you probably never even heard of.There are many benefits to dealing with a life insurance broker when you want to purchase a life insurance policy. The broker is familiar with the requirements of many different companies and knows which ones he/she can contact to get you the best rates on life insurance. It does not cost anything extra to use a broke...(related: Insurance)