What should I look for in a landlord insurance policy?

Posted: 26th May 2017

Sometimes it’s easy to slip into thinking that all landlord insurance is pretty much the same, apart from price.

In fact, that’s far from the case!

Here are a few points where the cover offered by a policy might differ between providers. They’re important things to be aware of.

Subsidence

This is a geological process that involves the ground falling away (technically called subsiding) underneath the foundations of a property. It might arise due to the ground simply collapsing away for unknown reasons, drought causing groundwater to disappear or old mining works etc.

The resulting damage can be catastrophic.

In passing, something called “heave” is the opposite, causing the ground to rise up and resulting in structural damage. The causes of that are equally as varied, though large-scale subterranean root intrusion is often a culprit.

Some landlords are surprised to know that not all landlord insurance automatically includes cover for these major risks. At Cover4LetProperty, our policies do provide such cover.

Tenant restrictions

Even more surprising for some landlords, is the discovery that some policies don’t provide cover for all tenants (ours have no restrictions).

Some policies may exclude some elements of cover in situations where you’re letting to students, housing benefit tenants or asylum seekers etc.

If those aren’t your target market segments then fine but if you wish to let to whoever you wish, you will need to look for all tenant cover.

Trace and access cover

A subtlety on some policies is that they don’t offer what’s referred to as “trace and access cover”.

What that means is that while the policy would typically cover the repair costs associated with say a leaking water pipe and the damage arising from it, it may not cover any costs associated with finding the source of the problem in the first instance.

If you’ve ever experienced just how expensive work in tracing a fault sometimes is and then the even more costly work of restoring the damage caused by such investigations, you’ll understand just how important this cover – which our policies typically include as standard – might be.

Flexible voluntary excess

Some landlords are prepared to accept the minimum mandatory excess on a policy. That’s the sum they’d have to pay as the first part of any future claim.

However, others might prefer the opportunity to obtain a lower premium in return for accepting a higher voluntary excess on the policy. That’s about allowing a degree of freedom to choose whether or not to take a higher degree of risk.

If you’re in the second category, it might be sensible to look for policy providers who can offer such flexibility, such as ourselves. In some cases the premium reduction might be very significant, perhaps as much as 40% of the standard cost.

Experience

There is no substitute for experience – and it’s not something that can be learned from a book.

Some landlords have unique individual circumstances. A policy that might be fine for 90% of other landlords just might not be an appropriate or cost-effective solution for them.

It’s experience and knowledge that allows a policy provider to identify suitable policies for a given situation. That’s why it’s highly advisable to look for providers who are specialists in this domain and who have a verifiable track record in it.

Strictly speaking, this isn’t a policy detail issue as such. This is about recognising that you probably don’t have the time or inclination to try and turn yourself into an insurance expert and that you need to be able to trust someone acting on your behalf to protect your interests through the policy they’re recommending.