Property Glossary

Act of God – a natural event, such as a storm, lightning or earthquake, rather than an incident caused by human action. Whether or not such natural events are covered in an insurance policy is a question solely for the schedule of insurance and relevant policy wording.

ARLA The Association of Residential Letting Agents, one of the UK’s well known professional bodies for letting agents.

Assured Shorthold Tenancy (AST) agreement – this is the standard form of tenancy agreement most widely used for residential lettings.            A model agreement is available, free of charge on the government website.

Buildings insurance ­– this provides cover for the structure and fabric of your let property against such major incidents as fire, flooding, escape of water, storm damage, impacts (from vehicles, falling trees and branches or aircraft, for example).

Buy to let – this is the business of buying a property with the explicit business intention of letting out the accommodation to tenants in return for a rental income.

Buy to let insurance – also known as landlord insurance, this provides the owner of buy to let property cover not only against the physical assets (such as the building and its contents), but also threats to the business itself, through liability claims or loss of rental income following an insured event.

Combined landlord insurance policies – combined landlord insurance policies incorporate various elements which might otherwise be insured separately into one single policy. Individual elements might include, building insurance, contents insurance, property owners liability insurance and employer’s liability insurance, as your circumstances as a landlord may require.

Commercial property insurancethe risks and perils to which commercial property is exposed are different to those faced by residential properties and, so, specifically designed commercial property insurance is required.

Compulsory excess – practically every kind of general insurance – including let property insurance – has an excess (the first part of any successful claim for which you remain financially responsible) which it is not possible to avoid. Such a compulsory excess needs to be distinguished from any additional voluntary excess.

Cooling off period – for any landlord insurance you might arrange, the insurer is required by law to offer you a so-called “cooling off” period of a minimum of 14 calendar days from agreeing to the cover to change your mind, cancel it and receive back any premiums you may have paid.

Discounts – many insurers offer discounts on the premiums you need to pay and these may be made for a number of reasons; as part of an introductory or promotional offer, for instance, because you have taken material steps to mitigate the risk of loss or damage, because you have not had to make a claim for a number of years, because you are introducing a friend or family member to the insurer or because you hold one or more additional policies with the same insurer.

Energy Performance Certificate (EPC)the owner of any residential or commercial property being offered for sale or for rent is required by law to hold an EPC for that property. A description of the contents of an EPC is published by the Energy Saving Trust.

Escape of water – just as it says, an escape of water is one of the principal risks typically covered in any landlord’s building or contents insurance policy.

Exclusions – exclusions are those risks specifically excluded from cover by the landlord insurance you arrange and, as such, are probably as important to understand as just what is covered by any policy.

Financial Conduct Authority (FCA) – the FCA is the independent regulator for the whole of the financial services industry and regulates and authorises all insurance companies, brokers and financial intermediaries.

Furnished – accommodation may be let furnished, unfurnished or part-furnished, depending on whether furnishings are included in the rental paid.

Furnishings  – the contents, including furniture such as sofas, chairs, tables, beds, carpets, but also including items such as cutlery, crockery, pots and pans and any other appliances.

Gas safety checkany landlord is required by law to arrange an annual inspection and safety check of any gas supply and all gas appliances within the let property. Inspections, and the safety certificate issued, need to be conducted by a registered Gas Safe engineer.

Holiday home insurance (UK) – if you own a holiday or second home in the UK, there are likely to be occasions when it stands vacant and unoccupied for reasonably long periods of time, and other occasions when you might decide to let it to tenants or paying guests. Given the special risks that are likely to be raised on such occasions, specialist holiday home insurance is required.

House in Multiple Occupation (HMO) – this is the term officially given to any let accommodation in which three or more tenants live as separate individuals or families and share the use of kitchen, bathroom or toilet facilities.

Index linking – the value of your let property and of its contents is likely to change over time. Index linking provides a way of ensuring that the valuation of the property and its contents reflects movements in a given index, typically the retail price index (RPI).

Insurance broker – an individual or a firm responsible for identifying and arranging suitable insurance policies on behalf of clients.

Insurance premium tax – also known as IPT this is a tax payable at a premium percentage rate on all forms of general (i.e. non-life) insurance policies, including landlord insurance.

Insurer – an insurer makes a written contract with the insured that, in return for the payment of a premium, if a defined event occurs (the risks covered) compensation is paid by the insurer.

Inventory – in order to establish a baseline describing the condition of let accommodation and its contents, an inventory needs to be compiled at the moment tenants take up residence. This is compared to a final inventory on their departure.

Key facts document – a key facts or key features document outlines the main features of your landlord insurance policy, or for that matter, any other form of insurance.

Landlord – the landlord is the owner of any residential or commercial property which is let to tenants in return for the regular payment of rent.

Landlord legislation – with the main intention of safeguarding the health and safety and rights of tenants, a raft of legislation has been enacted by way of landlord legislation.

Landlord’s contents insurance – contents insurance covers those items in the let property which are owned by the landlord. Those contents may be as basic as curtains and carpets or the comprehensive inventory for furnished let property.

Let property insurancethis is the landlord’s principal means of protecting the let property and its contents against loss and damage and also typically offers indemnity against claims made by tenants, their visitors or members of the public who claim the landlord’s liability for injury or property damage they have suffered.

Letting agent – an agent who assists the landlord and tenant with the let. Service levels will vary and are as agreed between the landlord and the letting agent.)

Loss of Rent cover – after a significant insured event, your let property may be temporarily unfit for occupation. In order to compensate for the resulting loss of rental income, your landlord insurance may include loss of rental insurance, typically up to 20% of the property’s rebuilding value.

Malicious damage – damage which has been caused wilfully and deliberately. Some landlord insurance policies (but by no means all) provide cover against malicious damage by tenants.

Managing agent – a letting manages the day to day running of the property on behalf of the landlord. The landlord remains legally responsible for the property and repairs and maintenance, but the agent works on the landlord’s behalf.

No claims discount – a discount on the price of premiums which an insurer might allow (but is not obliged to offer) to an insured who has not made any claim on the policy in at least the previous year.

Non-standard (as in properties) – the building comprising a residence is typically constructed in a standard way, using brick or stone for the walls and tiles or slates for the roof. Any other type of construction may be described as “non- standard” and requires specialist insurance to cover against loss or damage.

Notice – also known as a notice to quit, this is the way a landlord informs a tenant that he wants them to leave. The length of notice and the rules regarding reasons that need to be given vary according to the type of tenancy agreement.

Overinsurance – if you arrange insurance where the total amount insured is greater than the actual, current value of the building and its contents, you are likely to be paying more than you need for the cover and are said to be overinsured.

Period of insurance – the duration or term of your landlord insurance is typically one calendar year, although shorter periods may be involved in other specialist forms of cover such as empty property insurance.

Policy – your insurance policy sets out in detail the contract into which you have entered with your insurer.

Policy schedule – this identifies the insurer and the insured and sets out the principal headings under which the insured risks are covered.

Portable appliance test (PAT)a test carried out on electrical appliances. The test is not legally required, although the landlord is responsible for ensuring any appliances provided are safe to use.

Portfolio – where a landlord owns more than one buy to let property, the collection of properties owned comprises a property portfolio.

Premium – what you pay to the insurer for indemnifying the risks scheduled in your insurance policy. The amount of premiums to be paid is determined by the insurer’s assessment of the risks.

Property owner’s liability insurance – as the landlord and owner of the let property, you owe a duty of care towards tenants, their visitors and members of the public, requiring you to take all reasonable precautions against their being injured or having their property damaged.

Rebuild value – the total building sum insured typically anticipates a worst case scenario in which the property need to be completely rebuilt, at a cost represented by its rebuild value as well as clearing of the ground, surveyor’s fees etc.

Renewal – to remind you that your current period of insurance is drawing to a close and to help make sure that you maintain adequate cover for your let property, most insurers send a formal reminder or renewal notice for the insurance, typically 21 days or so before the due date.

Right to Rent – to help the immigration authorities ensure that individuals have the right to remain in the UK, landlords are now legally required to establish any prospective tenant’s immigration status and, therefore, their right to rent. You are also required to keep copies of those documents you have checked in order to agree the tenancy.

Subsidence insurance – subsidence is a potentially serious threat to the physical integrity of any building since it refers to disturbance or collapse of its very foundations. Some, but by no means all, landlord building insurance policies include cover against this risk.

Sum insured – this is the total amount which you have agreed with the insurer by way of settlement for any claim of loss or damage under the terms of your insurance policy.

TDS – this is shorthand for the Tenancy Deposit Scheme, which places on the landlord a legal obligation to ensure that any deposit accepted from a tenant as security against breakages and damage is in the safekeeping of an approved independent third party.

Third party (person) – where the insured and the insurer are the first and second parties respectively to any insurance contract, a third party is any individual who becomes involved in any way in a claim relating to that insurance.

Trace and access cover – in order to discover the source of some insured risk that is causing damage to the property, holes may need to be made in walls or floors lifted in order to gain access to the fault. Trace and access cover provides insurance against the cost of tracing the fault and gaining such access.

Underinsurance – if the total sum insured is less than the value of your let property or its contents, you run the risk of there being insufficient funds in the settlement of any claim to make the necessary repairs or replacement. In that situation, you are said to be underinsured, the reverse of overinsurance.

Underwriting – this involves the assessment of the risks and perils faced by any subject of insurance and, therefore, represents the fundamental core of the insurance process and its contract.

Unoccupied property – the risks faced by an empty and unoccupied property are different in their nature and scale to one which is occupied on a more or less continuous basis. For that reason, most standard building and contents insurance is substantially reduced in its cover, or lapses altogether, if the property has been unoccupied for more than 30-60 days (depending on the original insurance). To ensure that adequate protection is maintained in these circumstances, specialist unoccupied property insurance is required.

Voluntary excess – whilst a compulsory excess is typically imposed by an insurer in the event of any successful claim, a voluntary excess is the way for the insured to accept a still bigger contribution to the costs of repairing or replacing any loss or damage – in return for a reduction in the cost of insurance premiums, since the insurer is thereby relieved of a greater proportion of the risks.