We appreciate that most property investors and Landlords will not spend their evenings studying their property insurance policy! It’s also all too easy to see insurance is just a cost, that is until the worst happens!
We have listed our Top ten Buy-to-let Insurance claims. Hopefully, this builds a picture of some of the key areas you should be looking out for to protect your property investment.
#1 Escape of Water
Water damage claims remain the single most common occurrence for property policies. Whether it be a burst pipe or an over-running bath, the resultant damage can be significant. You can reduce risk by turning off the water supply between tenants or while the property is vacant. You will probably find that this is a policy condition for most let property or unoccupied property insurance contracts.
#2 Storm Damage
The St. Jude storm in October 2013 is reported to have cost the insurance industry circa £130 million in claims as it raged across Southern England. Storm claims can be as little as lost roof tiles to falling trees onto houses or outbuildings. Obviously, you can’t affect the weather, but by “battening down the hatches” and securing loose objects or ladders around the property you can minimise your exposure.
#3 Accidental Damage
You may be lucky and have the most diligent of tenants, but accidents can still happen, and repair or replacement costs can be high. Typical claims could include a hot pan damaging a work surface, or a cracked bath or sink after an item was dropped accidentally. Wide of your usual vigilant vetting process there is little you can do to prevent accidents. Still, you should check that your policy extends to cover accidental damage and whether it applies to both buildings and/or contents cover.
Even if a property is let unfurnished, the damage following a theft or attempted theft can still be costly to a Landlord, both financially and in terms of time. Depending on the method of entry, claims can be for replacing doors, windows or patio units and frames. Other common claims include theft of landlords’ contents or theft from outbuildings (lawnmowers, etc.).
Empty properties present a significantly increased risk of a break-in with thefts of entire kitchen or bathroom units not uncommon. Some unoccupied property insurance cover will exclude theft, as such, it’s essential to read and understand the small print before the property is vacated.
Little explanation needed here as I’m sure we can all recall seeing some devastating images following fire losses. No smoking rules can really help in reducing your risk as smoking has been established as the single most likely cause of a house fire. Even more worrying is that 33% of all fatalities in the home were caused by accidental fire from smokers’ materials (England 2011-12).
Other significant areas of concern are chip-pan fires and electrical fires from faulty wiring or equipment.
Make sure the property has working smoke alarms and fire extinguishers in the kitchen areas. These should be checked regularly, and notes kept on replacement of batteries and servicing.
Subsidence occurs where there is movement of the property impacting the foundations. This can cause significant cracking and render the property unsafe. Subsidence can be caused by many factors, including:
- Arid soil causing the water table to drop & movement in the property
- Tree roots growing under the property foundations
- Regional historical issues from mining or high levels of gravel, sand or salt
Subsidence claims can be large, particularly if the property requires underpinning to rectify the problem. Geographic risks will usually be picked up by survey during the property purchase, and we would recommend you keep a close eye of any trees both within and adjoining the property if they are nearby.
Subsidence cover is ordinarily optional, and you should ensure this is added to your cover if you feel your property is at risk.
According to rating agency Fitch, the horrendous flooding which hit the UK in the winter of 2013/14 is expected to cost the insurance industry £1.2 billion with some areas of the South West still suffering from flooding three months after the initial flood warnings.
Insurers and surveyors will have access to flood tables which will identify if your property or the property you are about to purchase is deemed “at-risk” of a flood. Those addresses in this category may find it difficult to arrange alternative flood insurance and would be advised to remain with the current insurer if cover is already in place.
Even if you are outside of the higher risk areas, recent events proved that flooding can still occur. We would recommend providing flood advice to tenants should a flood warning emanate (e.g. move all valuables to a higher floor etc.).
#8 Malicious Damage
Malicious Damage claims take two forms:
- Damaged emanating from a third party, for example, someone throws a brick through your window
- Malicious Damage by tenants, where the tenant themselves has caused the damage. For instance, one punched a door or wall or sprayed graffiti or the walls.
On most Landlord Insurance policies malicious damage by tenants is usually excluded, but can often be added on as an additional area of cover. You must check your individual policies to understand if cover is provided or you could find an unwelcome bill should a claim occur.
#9 Property Owners Liability
Property Owners Liability protects your legal obligations as a Landlord against resultant claims for injury or damage to property from a third party or the tenant.
Typical claims could include the postman tripping and breaking his leg on your uneven paving slabs or a tenant electrocuting themselves on a faulty switch.
Regular inspection and monitoring is the key to reducing risk and its’ important not to forget the garden or outbuildings.
Last but not least, impact claims typically occur where a car or lorry has left the road and run into the property. Fortunately, losses are frequently for boundary damage to walls or gates, but at their worse, it can impact the main property structure.
FREE Let Property Insurance Review
Whether you own a single property or an extensive portfolio, Insync can provide a FREE review of all your insurance needs. You can compare landlord insurance from up to 10 insurers in minutes or Book a slot online with one of our Business Insurance team at a time that suits YOUR diary. Alternatively, call us on 0330 124 0730 for more information, we would love to hear from you!