Risk Management Portal for RMK Clients
Top 10 Insurance Tips for Landlords
Mike Richards is a Charted Insurance Broker and Fellow of the Chartered Insurance Institute and sets out his top tips for landlords when choosing insurance:
You need specialist Landlords insurance
Typical home insurance policies may not be valid if you’re renting out a property, you need specialist Landlords Insurance to protect both yourself and your tenants.
Protect your income with Loss of rent cover
If your property suffers a claim which means your tenant has to move out, most landlord products should include cover to provide an income while the property is uninhabitable. Tenant default insurance is also available to buy which can protect your rental income if your tenants fail to pay their rent. However,we recommend that you check with your letting agent first to see if they offer tenant default (rent guarantee) cover. This is because there are tenant reference check requirements in all policies and they need to match your letting agents practice.
Liability insurance is essential
Landlords’ liability insurance protects you against compensation claims made by tenants or visitors for injury or damage caused at your property, for example, if someone tripped on a loose carpet and suffered a serious injury.
Long periods of unoccupancy can invalidate cover
Most landlords may experience periods where their properties are unoccupied between tenants. Insurers usually restrict cover after the property has been unoccupied for 60 or 90 days. This is because of the increased risk of vandalism or burglary. If your property could remain empty for a lengthy period, you will need to notify insurers and may need to buy a specialist unoccupied insurance policy.
Be accurate in the rebuild value
The amount you insure your property for should be based on the rebuild value of your property, which is the cost of rebuilding your property from scratch, including labour and materials. It should not be based on the market value of a property. A surveyor can help estimate the rebuilding value or you can take advantage of the cost effective rebuilding cost valuation service RMK can arrange.
Choose the right policy excess
Choosing a higher excess for your insurance can make your policy more affordable. Escape of water is the most common property claim and will often have a higher excess already built in to the policy so be careful you don’t accidentally increase this too high.
Protect your property
Installing smoke detectors, a security alarm and appropriate door and window locks at your property is vitally important to help protect the property and your tenants. It may also help reduce the cost of your insurance.
Don’t forget to insure your contents
Most landlords provide tenants with white goods so contents insurance can pay for repair or replacement if your contents are stolen or damaged by something like fire or flood. Malicious damage by tenants should also be automatically included in your cover. Tenants need to take out their own contents insurance to cover anything that belongs to them.
Consider Accidental Damage and Legal Expenses insurance
Accidental Damage cover can usually be added to buildings and contents cover which will help repair or replace your property if an accident happens, for example, spilling paint on a carpet. Legal expenses insurance covers legal action that you may need to take in relation to your rental property, for example, collecting unpaid rent or evicting tenants.
Use an insurance broker
Using a insurance broker means you benefit from expert knowledge and advice. Dealing direct with an insurer is not always cheaper as they often reduce their cover and increase their excesses to appear to be the cheapest when ranked online. You should not compromise on the cover and a broker can ensure that you have the essential covers at the right price. RMK can assist with a residential property owners online comparison quote and buy or contact us directly if you wish to discuss.
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