How do the insurance companies work them out?
We are often asked why the insurance premiums have gone up. There are a lot of reasons why, but we always do our best to give you an alternative. The main reasons are as follows.
The post code of your property.
Where your property is located has a baring on the cost of your landlord insurance. For instance, if you are in a high crime rate area, you are more likely to make a claim for damage or theft following a burglary. This could be reflected in your insurance. This also applies to properties where in the past they have not flooded but now they do. If the area is prone to flooding, there is a high likelihood you would be asked to pay more for your insurance.
The type of tenancy you may have.
The type of tenancy always effects the premium. The insurance companies calculate this based on the information that you provide. For instance, a DSS tenant may cost more than a professional tenant and the same as a student.
The type of building you own.
When calculating the price insurance companies consider for landlord insurance all the details of the property. They will for example consider whether it is semi-detached, terraced, flat and when it was built.
They also look at the size of the property as well as the number of bedrooms. Usually, the more rooms in the property, the higher the cost of the rebuild. This means they will pay more for your landlord insurance cover.
Government initiatives.
There are often changes made by the government that can affect you. These could include tax rules that have an affect on the price. For instance, insurance premiums tax increases. The government often increases these. IPT is a tax in general insurance premium, and it has increase incrementally since it was introduced.
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Repair and labour costs are going up especially after Brexit.
There was recently an article with the BBC that stated that royal materials as well as items such as cement are becoming more difficult to obtain. This includes anything from kitchens and bathroom suites to lighting and carpets. The fixtures and fittings are becoming more and more expensive to repair and replace. This will affect the value of your property massively.
Now that Brexit is taking place the cost of manual labour is going up too. A claim for repair can now be extremely expensive. This, in turn, can increase the cost of providing landlord insurance and the price you pay.
The number of claims being made.
Landlords who make frequent claims on their insurance will have to pay more to cover their property. The insurance companies will look at landlords who make multiple claims and look to increase the premiums to cover the claims that are being made. It is totally up to a landlord whether they make a claim or not. For instance, if it is £50.00 over the excess you may decide not to make a claim on the basis that the increase would be more than the increase in your premium.
Overall if the number of claims goes up, perhaps because things like accidental damages claims or extreme weathering events, this could mean the cost of your insurance premium goes up too.
Severe weather.
If there are long periods of cold weather or rain it can cause damage to let properties. Cold weather usually results in an increase in the number of insurance claims. Things like burst pipes.
When insurance companies calculate your landlord insurance price, they look at the likelihood of severe weather conditions happening in future and how many customers will be affected.
How to manage claims.
Assuming nothing substantial to block changes from year to year, the biggest affect on premiums that you can influence directly is your claims record.
Naturally, if there was a lot of claims, the insurers will identify you as being a higher risk. Escape of water often leads to a lead table of claims made at properties. If it keeps happening in the same building, then premiums will increase, or excesses will rise.
Insurers may even refuse to include cover for escape of water altogether in future. You should look to risk manage your property through regular inspections on plumbing and connections.
Covid-19
Unfortunately, due to Covid-19 this has also made an influence. This has played a role in costs increasing. It says that people remaining constantly at home during lockdown has resulted in more accidental damage claims. This is high cost of insurers. It predicts that some home insurance costs will fluctuate quite dramatically. This is also the case when the economy manoeuvres through the current lockdown.
It also states that the government stamp duty holiday could also have an impact on premiums as it can cause a spike in house moves and prices.
Insurance fraud.
According to a report in 2016 by the Charted institute of insures, insurance fraud costs policy holders potentially up to £50 per year. Unfortunately, it is the innocent who end up paying the price. Insurance companies are working hard to try and stamp this out.
New technology.
Today’s home is becoming more and more advance every year. Items in and around properties come increasing complexed. Repairing or replacing them after a claim can be a lot more expensive. Insurance companies will now look at the latest tech trends when pricing policies.
How can I reduce my premiums?
Invest in security.
Ensuring your property is equipped with an alarm and has solid locks and doors could help reduce the risk of associated burglary. Therefore, reducing your premium. Bear in mind that the outlay will not necessarily outweigh the premium savings. However, you may see the benefits. The better the security the less likely you are due to make a claim.
Want a quote for unoccupied property? Want landlord’s insurance? Contact us on 01273 827090 or enquiries@iinsure365.co.uk
Say no to pets.
Insurance costs are more likely to rise if tenants have pets. This is because animals may make a mess that require a claim of some sort. Some landlords often take a larger deposit, so they do not have to make an insurance claim.
Minimize vacant property periods.
Generally, insurers are not keen on providing cover for a property whilst it sits empty for extended periods of time. HOWEVER, WE CAN DO THIS FOR YOU, SO DON’T HESITATE TO CONTACT US.
If the property will be vacant for a period, you will need to change your cover and you should contact us.
Do not scrimp on your policy.
It is always tempting to go for the cheapest landlord insurance policy. Simply because renting out a property incurs several other expenses already. This is another area that you can cut cost.
However, in the unlikely event that you need to make a claim you will be sorry later if you did not have the adequate protection. It is totally a matter for the client to decide what type of cover they require, and we cannot advise you. You may end up having an enormous bill for the sake of saving a few pounds. Choice the right cover for you rather than the right price.
We always try to ensure that you get the best possible cover at the best possible price. Why not click here for instance quote.
