Landlords Insurance – Are you covered?
Does any of you Landlords out there really and truly understand your insurance policy and read it from start to finish (even the small print) my guess is – not many.
Buildings – the building sum to be insured, this is not the market value (what you paid for the property) this is the re-instatement value. This is the cost that if anything was to happen i.e. a large fire which rendered the building unsafe/uninhabitable and you had to rebuild the whole of the property which includes, the demolishing of any structure, the taking away of the debris and rebuilding the property at today’s prices. This has to be at the correct level to avoid under-insurance, if you are in any doubt as to the correct level of cover required get a survey done from a professional surveyor as they will be able to confirm the correct re-instatement value. If not try this link https://abi.bcis.co.uk/ to assist in receiving an indication of what the building should be insured for.
Contents: These are the value of the contents that you as a landlord place into the property, i.e. carpets, curtains, white goods and any other furnishings you may supply. The best way to describe this is that if you picked the house up, tipped it upside down then everything that falls is classed as Contents.
Property Owners Liability – as a landlord you should protect yourself against any tenant or member of the general public, that if they should be injured whilst at your property and it was deemed that you as the landlord had been negligent and were liable for that injury then any award given would be dealt with under this section of the policy, if you do not have this type of cover then any claim could be directed against you personally with financial implications against any of your properties which you own. The minimum level of cover should be £1 million, however you can purchase up to £10 million of cover. On most insurance policies £1 million should come as standard cover if buildings insurance is purchased.
Employers Liability: If you as a Landlord employ any person to assist you in the running of your Buy to Let Properties then this type of cover is recommended, also if you employ cleaner’s or gardener’s to visit the properties you let. This is a legal requirement by the law to have a minimum of £5 million insurance cover, this is not included on normal landlord policies as standard and you may have to purchase a standalone policy for this type of cover.
Loss of Rent – in the event of a claim and the property becomes uninhabitable your tenant moves out, while the work is carried out will you be covered for the loss of your rent? Is this included in your current insurance cover? Most insurance policies do not automatically include this cover.
Landlord Legal Expense Insurance (Optional Extra) – Basic Cover is provided for legal costs of up to £100,000 per claim in respect of property legal disputes. Cover for rent arrears due from the tenant under the tenancy agreement and also reimbursement of costs incurred as a result of you being absent from work to attend court whilst on jury service.
Premier Cover can also be purchased cover will be for Legal costs of up to £50,000 per claim, Cover for rent arrears due from the tenant under the tenancy agreement and also reimbursement of costs incurred as a result of you being absent from work to attend court whilst on jury service. Legal expenses incurred in any dispute or legal proceedings made by or brought against you in connection with repairs or renovation of the insured property. Legal expenses incurred in defending a prosecution under the Health and Safety Work Act 1974 in a court of justice. Legal expenses incurred in respect of representation of the insured in an HMRC Investigation and Costs incurred in respect of legal expenses evicting the tenant from the property
Rent Guarantee (Optional Extra) – this type of policy will include the following:
Rent Recovery this will cover the costs and expenses in relation to the pursuit of legal proceedings for undisputed and unpaid rent, in relation to an insured property, which is due under the terms of the tenancy agreement between you and the tenant. Property and Squatters Protection – this will cover the costs and expenses in relation to the pursuit of legal proceedings an insured person is able to pursue in respect of an insured property arising from a nuisance, a trespass, an unauthorised occupation or damage caused to the insured property by a third party. Tenant Property Damage – this will cover the costs and expenses in relation to the pursuit of legal proceedings in respect of damage resulting from the tenant failing to return the insured property in the same condition as at the commencement of the tenancy. Legal Defence – this will cover the costs and expenses for defending an insured person’s rights relating to any prosecution in a criminal court arising from the letting of the insured property. 24 Hours Helpline Services – Provides you with confidential legal advice on any personal matter 24 hours a day 365 days a year, also included is Tax Advice, a Domestic Assistance helpline and counselling helpline. Repossession – will cover you for the costs and expenses in relation to the pursuit of legal proceedings in respect of obtaining vacant possession from the tenant of the insured property at the expiry of a valid notice to quit being served. Rent Guarantee – will cover in respect of an insured property A) Pay your rent arrears while your tenant or ex-tenant still occupies the insured property, B) If, after you have gained vacant possession of the insured property, you are not in a position to immediately re-let due to the tenant’s dilapidations and/or neglect, this will also cover the amount of 50% of the monthly rent for a maximum of three months, or until the insured property is re-let, whichever happens sooner. Tax Protection – this will cover the costs and expenses following an investigation by HM Revenue & Customs into your tax affairs.
Please make sure you check your policy wordings as each Insurance Policy is different.
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