It’s curious how many of us seem to approach the question of insurance. A renewal notice or reminder comes around each year, and there is a tendency simply to arrange the same cover as last year, with the same insurer, almost as a reflex reaction.
Renewals based on what amounts to little more than a sense of inertia, however, may leave you being short-changed with insurance that may no longer be the most appropriate for your current needs or cover that is no longer as competitively priced as it used to be.
Indeed, these are the two principle reasons for reviewing the landlord insurance you have – it is still:
- providing the cover you need, matching your current circumstances and requirements as a landlord; and
- as competitively priced as any alternative the market has to offer.
The world never stands still. Everything changes over time. And this extends to your role as a landlord.
The environment in which you are running your business is changing all the time. A quick glance at the website maintained by the National Landlords Association (NLA), illustrates just how regularly news breaks about landlords, the relationship with their tenants or with government. Many of these news stories reveal an impact on the landlord’s business environment and the risks and perils that come with the role of owning buy to let property.
It is against these risks and perils that landlord insurance is designed to give protection – so your cover needs to be reviewed to ensure that it continues to provide just that. Here are some of the points you might want to include in any review:
- you might have taken to your role as a landlord so successfully that you have invested in additional property and increased the size of your portfolio;
- instead of insuring each one separately, consider a single landlord insurance policy which incorporates your entire portfolio – you are likely to gain significant reductions in the cost of premiums on a property by property basis;
- one of the main reasons for having your insurance is that it covers the cost of completely rebuilding the property if a major incident totally destroys it;
- this means keeping valuation and the assessment of building costs up to date – the Royal Institute of Chartered Surveyors (RICS) has a useful online calculator for changes in the rebuilding costs index;
Additional aspects of building insurance
- a review is also the time to check whether your landlord insurance is providing all the protection you need, without including expensive cover for elements you might not need;
- the inclusion of cover against subsidence, for instance, might add a considerable amount to your insurance premiums, but you might not need it and may save money by excluding it;
- the same might be said for flooding insurance – although if you live in an area known to be vulnerable to such risks, you might want to pay an additional premium for the cover you need;
- when reviewing your landlord insurance, you might discover that cover for some threats to your property might be included as standard in some policies, but excluded from others – those arranged by Cover4LetProperty, for instance, commonly include cover against malicious damage caused by your tenants;
- you might also want to change your target market for potential tenants, only to discover that your current insurer may impose restrictions on the type of tenant that may occupy your let property – other insurers, on the other hand, might be entirely open to your letting the property to tenants from any background (students and those claiming benefits, for instance);
- especially if you are letting your accommodation unfurnished, you might own very little of the contents, but for carpets and curtains in the communal areas, for instance – but that situation may change and a review may indicate the need for increasing the amount of cover for the contents.
Competitively priced premiums
Many landlords are likely to be finding it more difficult to turn a profit on their buy to let business because of recent changes in the tax regime.
A report in the Telegraph newspaper on the 15th of March 2016, for instance, explained how one landlord was going to have to sell their buy to let property or increase rents as a result of his increased tax liability.
With the viability of buy to let businesses under such pressure, it becomes more important than ever for landlords to control the expenditure on overheads needed to run the enterprise.
Since one of those overheads is essential landlord insurance, it makes sense to review this on a regular basis in order to discover whether more competitively priced cover is available.