If you’re a landlord looking to take out insurance or renew a current policy, there are a few things you should know. The insurance market is “hardening”, or in other words, insurers are tightening their belts. The rising costs of claims due to extreme weather events such as last year’s Storm Dennis and low interest rates (meaning insurance firms make less on their investments) have hit the industry hard. As a result, insurers are upping the cost of premiums and employing other – less obvious – tactics to increase their bottom line.
But first, a quick reminder. Landlords need specific insurance; a standard home and contents policy will not suffice. Landlord insurance is usually a condition of a buy-to-let mortgage, but even if you’re debt-free, it’s worth getting. (You hope the worst won’t happen, but if it does, you’ll be covered.) Standard policies include buildings and liability cover, although you can also opt to include things like legal costs, accidental damage, or loss of rent.
Insurance tips for Melton landlords, Follow this checklist to get the best deal
– If you already have a policy, read it thoroughly before you start your research. It might not be the most exciting few hours of your life, but your diligence could save you time and money in the long run.
– Note in your diary when your policy is due to expire and leave yourself enough time to shop around. You won’t get the best deal if you’re in a last-minute panic.
– Look at what the premium covers. Is there a gaping omission that could leave you exposed? If it’s an existing policy, has your coverage been reduced?
– Check the standard excess (excess rates have been creeping up). The policy premium might be appealingly low, but if the excess is high, you could wind up paying more in the long run.
– Be aware that some types of claims have a higher excess. For example, escape of water (which covers leaks and burst pipes) has a higher excess as it’s a more common occurrence.
– Check the rules around vacancy as some policies become void if the property is empty. As there could be a rise in tenant turnover when furlough ends later this year, ensure your policy gives you a bit of leeway on vacancy periods.
– Have your paperwork to hand when talking to insurers. They’ll want to know (and see proof of) the age of the property, state of repair, and claims history.
– Some policies only cover certain types of tenants – for example, professionals – who are viewed as low risk. It may pay to include other tenant groups, such as students, in your policy to give you more flexibility.
For more advice about protecting your rental property, get in touch with us here at Newton Fallowell.
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