Having multiple properties to manage can sometimes be time consuming, finding tenants, repairs, building works, unoccupancy, chasing rent. The last thing you need is to have a claim at one of your properties and find out there is a problem
Here are some residential portfolio insurance tips when reviewing your cover:-
Does it matter what sort of tenant I have?
Your insurers will want to have the knowledge of specific tenants in each property as they will rate the premiums differently according to the type of tenant you have in your property.
What if I lose rent due to fire or flood?
If you have tenants forced to move out due to fire or flood then you can usually claim for any lost rent whilst your proper is being restored to normality.
The key is to make sure you have updated your rents sums insured. If you have a lot of properties you may need to just do a one off exercise then index link the rents to increase with inflation each year to take the pain out of calculating these, then review every 3 years to ensure they are not escalating beyond market conditions.
Can I guarantee my rent if a tenant fails to pay me?
Loss of rent in the event of financial difficulty rather than an insured peril is usually an optional extra presented as part of a legal expenses property insurance.
Not all policies include this as part of the legal cover but you can obtain specific rent guarantees. This will allow you to reclaim the rent and also usually provides cover for evictions and legal action against tenants.
This ensures you can continue to service your mortgage worry free.
What value should I note as the building sums insured?
Insurance documentation is confusing even more so with property sums insured. You will normally have two values listed on your policy
1. Declared Value – the actual rebuild value of the property NOT the market value.
2. Day One Value – This is the rebuild value of the property with an additional percentage to take into consideration inflation adjusted costs throughout the policy year, so if costs of rebuild increase then you don’t need to worry as insurers have inflated your cover automatically.
You should always get a RICS approved valuation to ensure you have the correct valuation.
Did you know you can obtain this from as little as £150 from a virtual RICS (https://www.rics.org/uk/) building surveyor.
Blending technology with traditional methods they are able to obtain accurate RICS valuation which is the only one insurers will approve.
This gives you a cost-effective way in which to obtain a true rebuild value of your policy then for peace of mind you can index link this to increase with inflation and review every 3 years to make sure it is in line with market movements.
What if a tenant causes damage to one of my properties on purpose?
You will need to look if your insurer covers ‘Malicious Damage’ as part of their cover otherwise claims made from a tenant purposely damaging your property wouldn’t be picked up leaving you with the bill.
Your broker shouldn’t really recommend a policy without this cover as its often the one where a tenant can cause an untold amount of damage.
What do I do if the property is unoccupied?
Normally insurers will give 45-60 days for you to find a tenant. If you go beyond this then the risks change and as such they will apply additional charges to that property. When you then find a tenant they will reduce the costs as the risks become lower.
Whilst it’s unoccupied then the insurers will require you to stick to their unoccupancy conditions, this will be usually a set time to inspect the property, setting heating controls and other such things as security.
What happens if I am doing renovation work?
Minor renovation work is usually ok, however any major renovation work internal or external may void your cover.
It is in our opinion always better to get a specific renovation property insurance, you can usually get these for 3 6 or 12 months and flex the cover to what you need dependent on where you are in the development.
What cover do I need if I am part of a residential associations?
If you are part of or set up a residents association then you may all be liable to claims made against the residents association for wrongful acts.
As such you will need to consider protecting yourselves through a residents association directors & officers insurance policy.
This will provide you with legal cover for any claims made against the members of the association, it can also provide cover for internal claims made from one association member to another such as theft or fraud.
What if I own a plot with various houses, outbuildings and common parts?
If you have developed a site and have a mix of rented and owned properties on the site but you still own things like the land, car park and common outbuidlings you will have a duty of car to insure these.
You will also want to have property owners liability which would protect you for any 3rd part property damage or bodily injury i.e. a slate fell of the roof of an outbuilding and hit a member of the public or a resident.
Can I cover my contents if I am renting the property out?
Yes, if you rent out furnished properties then you can cover contents as you would on your normal house insurance (link to house please).
What if I have a legal battle with my tenants?
Most property owners insurance policies will have legal helplines and or legal protection cover. This is always an add on to your policy so make sure you include this if it is a worry of yours.
This can cover the legal expenses in dealing with disputes with tenants and is always a fraction of the cost to the actual legal costs you would incur if you sought your own council.
What if I have a house with multiple occupancy (HMO) in my portfolio?
HMO insurance would normally sit outside of the scope of most standard residential insurers. However as part of a portfolio you may be able to add a small number dependent on the rest of the properties in your portfolio.
They are seen as a bigger risk due to the numbers and types of people who would occupy a HMO i.e. students.
Always ask the question of your broker as if you run your portfolio well and this has been communicated properly with your insurers then they will always try to be flexible.