Buy to let landlords will face a time when they have to make a claim on their landlord insurance. Any insurer will have their criteria applicable for a successful claim to be made. It is important for landlords to understand the expectations and what their obligations are. An explanation of the usual barriers faced are below.
Failing to give the insurer proper information or reporting the claim
Insurance companies aren’t going to pay out unless they have full details of the claim. It may be that there are a certain number of days in which to inform the insurance company of a claim. The usual time frame is within 30 days of the damage taking place. It is important therefore that as soon as a landlord is aware of a potential loss they notify the insurance company and complete a claim form. It is always important in relation to claims to give as much information as is possible to the Insurance company. For instance, there needs to be the correct insurance in place. Specifically, landlord insurance not just a home insurance policy. In this instance, they may not pay out.
Not knowing what the policy covers
If the property has tenants in a home insurance policy would not be sufficient. When taking out a policy be sure to read the terms and conditions and understand the cover levels.
Items to look out for are; malicious damage by tenants, subsidence, flood and accidental damage. Each policy will differ depending on the insurance company. Don’t hesitate to ask if you wish to have details of the policy.
Under Insurance
It is essential to not under insure the property. For example, the cost of rebuilding the property is £70,000.00 but the rebuild cost used for insurance is £35,000.00. If there was to be a claim for water damage and the cost of repairs came to £6,000.00 after the excess it would be underinsured by 50%. The claim payout would, therefore, reduce by half to £3,000.00 rather than the full £6,000.00.
It is very important to get this right. It is also critical to not remove index linking at renewal as often this will leave the building underinsured and exposed on a claim.
Fair Wear and Tear
A landlord insurance policy will not cover damages that relate to fair wear and tear. If any damage is due to wear and tear landlords will have to cover this as part of their “landlord business”. Even though they may not consider themselves a business in the traditional sense.
Damage to Unoccupied properties
Most landlord insurance policies will only provide cover to an unoccupied building for a limited number of days. This ranges from 14 to 90 days. It is important to be aware of what the policy allows for.
If it is going to be unoccupied for longer than this then the insurance company will need to be informed. They may well limit the cover to fire, lightning, explosion and aircraft damage, commonly known as FLEE cover.
Failing to check the tenants and/or carry out inspections
For a house in multiple occupation (HMO), it is now law to ensure that properties are regularly checked if a licence is in place. Insurers also expect landlords to carry out regular inspections. It is important to check the property roughly every three months. Especially considering that there are a substantial amount of problems with tenants and cannabis farms. If regular inspections are not carried out the insurer is within their rights to not pay out. Inspections are now critical.
Summary
There could be many problems experienced by landlords when making a claim on their insurance. Yet most of these will be down to sloppy practice. It is the landlords’ responsibility to ensure they are covered correctly. So it is important to check the insurance documents when they arrive. Don’t hesitate to contact us if you wish to discuss the insurance with us.
