Association of British Insurers
The Association of British Insurers (ABI) represents the collective interests of the UK’s insurance industry. The association speaks out on issues of common interest and participate in public debates. Find out more about the ABI by visiting their website www.abi.org.uk/
Accidental Damage Cover
An additional cover to protect you against damage caused suddenly and unexpectedly by an outside force.
Annual Safety Checks
Under the Gas Safety Regulations 1998, all gas appliances and flues in rented accommodation must be checked for safety within 12 months of being installed, and thereafter at least every 12 months by a CORGI registered engineer.
Assured Shorthold Tenancy Agreements
As described in The Housing Act 1988, and as amended by the Housing Act 1996, an assured shorthold tenancy is a tenancy which offers the landlord a guaranteed right to repossess his property at the end of the stated term. In fact, it does not necessarily have to be ‘short’; assured shorthold tenancies set up after 28 February 1997 can be for any length of time the landlord wishes to offer.
Security bonds (deposits) are recommended by most Letting Agents. It is recommended that when letting a property a bond (deposit) of one months rent is paid by the tenant and held in a designated Client Account. The money is only to be used to cover agreed losses incurred by the Landlord, such as non payment of rent or breakages.
Buy to Let Insurance
Buy-to-Let insurance is the same as Residential Landlord’s insurance. Buy to let is a terminology used by many banks and building societies to describe the type of mortgage required.
In the unfortunate event of a claim notify us of the circumstances immediately, or in any case as quickly as possible, after the event. Take whatever reasonable steps are necessary to secure your property and avoid further damage. Retain any invoices, receipts for emergency work carried out to your property. If the claim is as a result of a crime, i.e. burglary, theft, malicious damage, please immediately inform the Police and obtain a crime report number.
At the start of the tenancy, the property must be in a thoroughly clean condition, and at the end of each tenancy it is the Tenants’ responsibility to leave the property in a similar condition. Where they fail to do so, cleaning can be arranged at their expense.
Contents (Definition of ‘Landlords Contents’)
Household items that you own or that you are legally responsible for. This does not include any part of the structure of Your Home including ceilings, wallpaper and the like; any item used for business or professional purposes and any living creature. The definition of ‘Contents’ does not include items such as documents of any kind, Motorised Vehicles, aircraft, boats and craft designed to be used on or in water, caravans or trailers. Specifically excluded is any property insured by any other insurance policy. Cover for Contents is normally arranged on a new for old basis.
Council Tax and Utility Bills
You or your Letting Agent should arrange for the transfer of Council Tax and utility accounts to the Tenant. Meter readings should be taken, allowing closing gas, water (if metered) and electricity accounts to be drawn up. Some service providers it should be noted however, such as British Telecom, require instructions directly from both Landlord and Tenant.
Data Protection Act 1998
Insurance Brokers and Insurers alike place a great importance on the confidentiality of their client’s records, in both paper form or electronic data. Under the terms of the Act they are not allowed to release any information they may hold on record concerning an individual or their policy to anyone other than themselves, ‘the Insured.’
The only exception is if the information is required to be given by law to the authorities, i.e. Police. If a policyholder wishes another party, for example their Partner, Son, Daughter or Managing Agent, to have access to their details or policy and to be able to give instructions on their behalf, then they must give specific written instructions to this effect.
You are responsible for providing accurate and complete information, which insurers require in connection with any request for insurance cover. This is particularly important before taking out a policy and at renewal, but it also applies throughout the life of a policy. If you fail to disclose any information when asked, this could invalidate the policy and mean that claims may not be paid. You should check all details on any proposal form, statement of Insurance or Statement of Fact and pay particular attention to any declaration you may be asked to sign.
Without exception all insurance policies contain excesses. This is the amount the policyholder has to pay towards the settlement of any claim made. The standard excess for most Landlord policies is either £100 or £250 which increases to £1,000 in respect of claims made for subsidence, heave or landslip.
The Financial Conduct Authority are an independent body that regulates the financial services industry in the UK. You can check out who is, or is not registered, by visiting their site www.fsa.gov.uk/pages/register/
Fire (Consumer Protection)
The Furniture and Furnishings (Fire) (Safety) Regulations 1988 (amended 1989 & 1993) provide that specified items supplied in the course of letting property must meet minimum fire resistance standards. The regulations apply to all upholstered furniture, beds, headboards and mattresses, sofa-beds, futons and other convertibles, nursery furniture, garden furniture suitable for use in a dwelling, scatter cushions, pillows and non-original covers for furniture. They do not apply to antique furniture or furniture made before 1950, bedcovers including duvets, loose covers for mattresses, pillowcases, curtains, carpets or sleeping bags. Items which comply will have a suitable permanent label attached. Non-compliant items must be removed before a tenancy commences.
Flood risk areas cause major problems for insurers because of the size of any claim made. Flood claims should not be confused with burst pipes or any other escape of water within the Home. The accepted norm for flood claims is once every 200 years. For high risk areas the ratio is once every 100 years, and for those areas that carry the greatest risks, once every 50 years. An insurer might ask for a higher excess for any flood claim for a property situated in a high risk area. You can check out possible flooding problems at www.environment-agency.gov.uk/
It is recommended that you leave only minimum furnishings, and these should be of reasonable quality. It is preferable that items to be left are in the property during any viewings.
Gardens should be left neat, tidy and rubbish free, with any lawns cut. Tenants are required to maintain the gardens to a reasonable standard, provided they are left the necessary tools.
It is a legal requirement if the let property has any gas appliances that the appliances, flues and associated pipe-work are maintained in a safe condition and inspected annually, and a safety certificate issued, by a CORGI registered engineer. Full records must be kept for at least 2 years of the inspections of each appliance and flue, of any defects found and of any remedial action taken. A copy of the safety certificate issued by the engineer must be given to each new tenant before their tenancy commences, or to each existing tenant within 28 days of the check being carried out.
Electrical, gas plumbing, waste, central heating and hot water systems must be safe, sound and in good working order. Repairs and maintenance are at the Landlords expense unless misuse can be established. Interior decorations should be in good condition.
Health and Safety (Electrical Equipment)
Under the Electrical Equipment (Safety) Regulations 1994, and certain other regulations, electrical appliances and equipment provided in tenanted premises must be safe. It is therefore necessary to make a visual check to ensure that all electrical items, plugs and leads appear completely safe and undamaged, and remove or replace any faulty items.
The upward movement of the ground supporting a building.
Home (Defined for Insurance puposes)
The house or flat and its outbuildings, used only for domestic purposes.
Home Information Packs
As from the 21st May 2010 for anyone selling their home the requirement for packs has been suspended, with further legislation being required to outlaw them completely. The requirement now being for sellers to provide a simple energy performance certificate, which it is envisaged will cost around £60. Previously: Home Information Packs are a set of documents, which provide home buyers with key information about the property that they may wish to buy, such as Land Registry searches, copies of the deeds to a property and a Home Condition Report. The Home Condition Report is a new document required as part of the home buying and selling process. It contains information about the physical condition of a property, including its energy efficiency.
When resident in the UK, it is entirely the Landlords responsibility to inform the Inland Revenue of rental income received, and to pay any tax due. Where a Landlord is resident outside the UK during a tenancy, under rules effective from 6 April 1996, unless an exemption certificate is held, it should be noted that Letting Agents are obliged to retain and forward to the Inland Revenue on a quarterly basis, an amount equal to the basic rate of income tax from rental received, less certain expenses. An application form for exemption from such deductions is usually available from most Letting Agents, and further information may be obtained from the Inland Revenue.
Information for the Tenant
It is helpful if you leave information for the Tenant, e.g. on operating the central heating and hot water system, washing machine and alarm system, and the day refuse is collected etc.
Insurance (Buildings and/or Contents)
You should ensure that you have suitable Landlord’s (Buy-to-Let) Insurance to cover both your buildings and any contents, however small in value, in the property. If you intend to let out a property previously occupied by yourself, you must inform your insurers as failure to do so could invalidate your policies.
It is extremely important that as a Landlord you have an inventory of all contents left in the property and a schedule prepared in respect of the condition of the property, in order to avoid any misunderstanding or dispute at the end of a tenancy. Without such safeguards, it will be impossible for you as the Landlord to prove any loss, damage, or significant deterioration of the property or contents and hold the tenant liable, or alternatively, make a successful insurance claim.
If a property is jointly owned with a partner or other family members, then the insurance cover should be arranged in joint names, as all parties have a financial interest that they should protect. In some circumstances a Mortgagee (the Bank or Building Society providing the Mortgage monies) will ask that their name appears as a joint insured as well as one who has a financial interest in the property.
You should provide one set of keys for each Tenant and keep one set for you for emergencies. Letting Agents will normally manage this on your behalf and arrange to have duplicates cut as required.
The downhill movement of unstable earth, clay, rock, etc, often following prolonged heavy rain or coastal erosion
If you are a leaseholder, you should check the terms of your lease and obtain the necessary written consent before letting.
Legal Expenses Cover
Cover is provided for irrecoverable costs and fees to pursue or defend claims involving a breach of a tenancy agreement. It should be clearly understood that insurers have several stringent conditions attached to the granting of this cover that must be strictly adhered to by the Landlord before a tenancy is granted. You should carefully read any Key Feature document supplied by an Insurer so that you are fully aware of their particular terms and conditions.
Should you decide to employ the services of a Letting Agent you must expect to pay them, normally around 10% of the rental income per year, plus VAT.
As Property Owner and/or the Employer of Domestic Staff. It is standard practice for most Landlord’s Insurance policies to automatically include liability cover. Under cover for Buildings You are covered for Your legal liability as owner of the Buildings to pay damages and claimant’s cost and expenses for accidental bodily injury or illness; or accidental loss or damage to property. The standard limit of indemnity is £2,000,000 which most people find adequate. For those who do not find this figure adequate, say because of contractual conditions with a Local Authority, it is possible in most circumstance to get this increased to £5,000,000 upon payment of an additional premium. Under cover for Contents You are covered for Your legal liability as owner of the Contents to pay damages and claimant’s cost and expenses for accidental bodily injury or illness; or accidental loss or damage to property. In addition under the contents section you also have cover for Your legal liability as the employer of domestic staff where the injury or illness happens as a result of or in the course of their employment by You. The standard limit of indemnity in connection with the employment of domestic staff depending upon insurer varies between £5,000,000 and £10,000,000.
Loss adjusters are impartial claims specialists appointed by an insurer to deal with a claim on their behalf. Loss adjusters’ fees are paid by the insurance company concerned who rely on them to check claims for quantity, description and pricing. After discussions with the policyholder, the loss adjuster’s report to the insurance company enables the company to process the claim without delay.
Loss of Rent
A good Landlord’s insurance policy will include, under both Buildings and Contents sections, cover for Loss of Rent following a claim in respect of an insured peril, such as a fire or escape of water, which then results in a loss of rent for the Landlord, because the property is uninhabitable. Cover is normally provided up to 20% of the section sum insured.
If because of the area in which the property is situated or say because of a previous theft claim an insurer when being asked to insure contents, requests that the property be fitted with minimum security, the following level of security would be required, before theft cover could be granted. Either of the following to the main entrance door: a lock approved to BS3621 or a mortice deadlock of at least 5 levers or a rim automatic deadlatch with a key-locking handle on the inside or a key-operated multi-point locking system with at least three fixing points and a lock cylinder with at least five pins to the main entrance door Other external doors: key-operated security devices top and bottom in addition to existing locks or a lock to the standard as specified for the main entrance door; except sliding patio doors for sliding patio doors, a key-operated patio door lock mounted internally on the centre rail(s) or protection to the standard as specified for other external doors above To all opening windows and skylights on the ground floor and those which are accessible on other floors: key-operated security devices All fitted security devices would have to be put into operation and all keys removed from locks and placed out of sight whenever the private dwelling was left unattended. All external accessible windows skylights as described above and all external doors would have to be secured as above when the household had retired for the night, except windows in occupied bedrooms which could be left open for ventilation. You would have to get your insurers written agreement if you wanted them to accept alternative security devices.
If your property is mortgaged, and if you have not already done so, you should obtain your mortgagee’s written consent to any letting. If you have a specific Buy-to-Let mortgage they will already be fully aware of your intentions, but you should still let them know if the status of your tenants changed as opposed to what was originally agreed to. Any mortgagee will also require their financial interest to be noted under any buildings insurance and will insist that your sum insured be as stipulated on any building surveyor’s report and be indexed linked.
Motorised vehicles are specifically excluded but the definition does not exclude vehicles used only as domestic gardening equipment within the boundaries of the land belonging to Your Home.
No Claims Discount
This is a discount offered by some, not all, insurers that recognises the fact that a policy has been claim free. The discount given can vary from insurer to insurer. It is normal for a claim free period to be recognised (subject to written confirmation) and a discount given, even if the last insurer themselves gave no discount. All the insurers used by us give and allow no claim bonus under their Landlord’s policies. It should be noted that in the event of a claim subsequently being made the discount will be reduced in accordance to the scale applicable at the time.
We do not differentiate between properties that are let to a sole Tenant (just have the one Tenancy agreement in force) or those that contain multiple Bedsits or Flats (have multiple Tenancies). Our acceptance is the same for either circumstance, although we are aware that many insurers do differentiate between the two and prefer not to insure properties with multiple tenancies.
A standard policy covers a wide range of incidents which are known as Perils. The standard Perils are as follows: Fire, Explosion, Lightning, Earthquake, Smoke (non gradual), Storm, Flood, Riot, Civil Unrest, Strikes, and Labour Disturbances, Malicious Acts (not by tenants, unless specifically requested). Being hit by: Aircraft or other Flying Objects, or anything falling from them; Vehicles or Animals. Water escaping from water tanks, pipes, equipment or fixed heating systems. Water freezing in tanks, equipment or pipes. Oil leaking from a fixed heating system. Theft or Attempted Theft (not by tenants, unless specifically requested). Falling radio and television aerials and dishes, and their fittings and masts. Subsidence or heave of the land that the Buildings stand on, or landslip (does not cover coastal erosion). Falling trees or branches. It should be noted that not all Perils apply when a property is Unoccupied or Unfurnished for more than 60 days (with some insurers the period is longer and/or can be extended if required) in a row.
Preparing the Property
It is important that your Tenants should feel comfortable in their temporary home, and feel that they are receiving value for their money. It follows, therefore, that a well maintained property in good decorative order will go a long towards this, whilst at the same time achieving a maximum rental figure. Tenants are also more inclined to treat such a property with greater respect.
Quotations/Bids for Landlord’s Insurance
We have quickly become one of the UK’s most visited websites for those wishing to arrange insurance for their residential let properties, whether cover is just required for buildings or contents, or a combination of the two. We have a good reputation of providing excellent service levels, with most documentation being turned around the same day that instructions are received. We aim to be competitive at all times and for all circumstances. Our Landlord’s insurance scheme(s) are some of the few that recognises claim free experience giving a No Claim Bonus discount.
A tasteless and odourless but deadly naturally occurring radioactive gas. Find out more at www.hpa.org.uk/. The gas is the second biggest cause of lung cancer in the UK after smoking. It comes from the decay of uranium and radium found naturally in rocks and soil. It affects both new as well as old houses. The levels of Radon gas varies considerably from area to area. Radon is now a mandatory question on all conveyancing. If a problem is found in a property it can usually be sorted for around £1,000 by specialist measures, such as improving ventilation under floors. Radon reports can be ordered on line at www.landsearch.net/localauthority.asp.
CHECKING YOUR SUM INSURED.
The ABI (Association of British Insurers) in conjunction with BCIS, the RICS Building Cost Information Service provide an online facility for checking building sums insured. Most domestic house insurance policies require that the sum insured is the full rebuilding cost of the property. It is the responsibility of the insured to get this figure right. BCIS has been commissioned by the Association of British Insurers to provide guidance figures for the rebuilding cost of a home to allow householders to check their sums insured. Their calculator gives a general indication of rebuilding costs for many common properties within the UK, but it should be noted that it is not appropriate for all houses and the rebuilding cost of even similar houses can vary depending on individual circumstances. Find out more by visiting their website www.bcis.co.uk/
Any Landlord should consider obtaining written references for any possible tenant. These are a requirement if you are also seeking Rent Guarantee Insurance. References are always obtained by most, if not all, Letting Agents as part of their standard business practice, which might also include credit searches.
Rent Guarantee Insurance
Extension of Cover – Normally arranged in conjunction with Legal Expenses Cover. It should be clearly understood that insurers have several stringent and onerous conditions attached to the granting of this cover, that must be strictly adhered to by the Landlord before a tenancy is granted and signed, if a successful claim for non-payment of rent is to be made. The cost of the cover is based on the monthly rent being charged and can be quite expensive when viewed in relation to the cost of buildings and contents cover. Most insurers will only insure up to a maximum of £2.000 per month. You should carefully read any Key Feature document supplied by an Insurer so that you are fully aware of their particular terms and conditions.
A Restrictive Covenant is a legally enforceable deed, usually created to protect specified rights concerning the use of a property or land. A restrictive covenant need not be new; it may have been drafted hundreds of years ago, specifying that a given plot of land cannot be used for development or certain purposes. Common examples of Restrictive Covenants, a) Not to erect any building or structures on the land that has been acquired, b) Not to use the land for any business activity, c) Not to use the land other than for agricultural use and not to carry out any building or residential development. A Restrictive Covenant insurance policy (also known as Restrictive Covenant Indemnity insurance or Restrictive Covenant Contingency insurance) provides for any loss in the value of the property and the legal expenses incurred in defending an attempt to enforce the covenant, subject to the selected limit of indemnity. Unlike most insurance policies, a restrictive covenant insurance policy lasts in perpetuity and as such can be usually be passed on to future owners of the property. For specialist advice we suggest that you look at such sites as www.stride.co.uk/
The Royal Institution of Chartered Surveyors. With around 100,000 qualified members and over 50,000 students and trainees in some 140 countries, RICS provides the world’s leading professional qualification in land, property, construction and the associated environmental issues. An independent, not-for-profit organisation, RICS acts in the public interest: setting and regulating the highest standards of competence and integrity among their members; and provides impartial, authoritative advice on key issues for business, society and governments worldwide. Find out more by visiting their website www.rics.org/
All properties built since June 1992 must have been fitted with mains powered smoke detector alarms from new. Although there is no legislation requiring smoke alarms to be fitted in other ordinary tenanted properties, it is generally considered that the common law ‘duty of care’ means that Landlords and their Agents could be liable should a fire cause injury or damage in a tenanted property where smoke alarms are not fitted. It is therefore strongly recommended that any Landlord fits at least one alarm on each floor (in the hall and landing areas).
Standard Insurance Cover
Includes in addition to the standard Perils cover for the following:- Under the Buildings section: Loss of Rent as a result of an insured peril Accidental Damage to underground services Accidental Damage to fixed glass and sanitary fittings Your liability to the public as owner of the Buildings Full Accidental Damage to the Buildings (optional cover extension) Under the Contents section: Contents temporarily removed from the Home Accidental Damage to televisions, video players, aerials, dishes and CCTV cameras fixed to the Home Accidental Damage to mirrors, glass tops and fixed glass in furniture, cookers and ceramic hobsContents in the open with the property boundary (Limits and Exclusions apply) Replacement of external door locks following loss of keys Accidental Loss of domestic heating fuel and metered water (Limit applies) Loss of Rent as a result of an insured peril Your liability to the public as owner of the Contents and in respect of the employment of domestic staff Full Accidental Damage to the Contents (optional cover extension)
Subsidence – What is subsidence?
Subsidence is the downward movement of the ground supporting the building. Particular problems arise when the movement varies from one part of the building to another. It can be caused by: Certain soils – Clay soils are particularly vulnerable to subsidence since they shrink and swell depending on their moisture content. Vegetation – Trees and shrubs take moisture from soils causing them to shrink. This is especially so during long periods of dry weather as roots extend in search of water. Leaking Drains – Damaged drains can soften or wash away the ground beneath the foundations of a building. Less commonly, problems may occur where properties are built over, or close to, mine workings. Subsidence damage to walls, gates, fences, patios, drives and swimming pools is not covered unless the Home is damaged at the same time and by the same cause.
Sums Insured (Buildings and/or Contents)
It is your responsibility to make sure that the amount you insure for represents the full cost of reinstating the property concerned. How much to insure for: For Buildings, this means the full cost of rebuilding the property including any outbuildings, plus an amount for extra charges that could be involved in rebuilding such as demolition costs, architects’ and surveyors’ fees and meeting the requirements of local authorities.
Tenanted Property Insurance
Tenanted Property Insurance is the same as Buy to Let Insurance and Residential Landlord’s insurance.
Tenants are normally classified into types for insurance underwriting purposes. The main category is Professional Working tenant. Another category is those who receive help with the payment of their rent through Social Services (DSS). The third most common category is Students. Fourth is Asylum Seekers and last but not least are those properties which are let to Local Councils or Housing Associations.
Unfurnished (Definition for Insurance Purposes)
Does not contain enough furniture for normal living purposes
Unoccupied (Definition for Insurance Purposes)
Not lived in by You or by anyone who has Your permission. We would advise that under the buildings section of an insurance policy, it is standard practice for an insurer to exclude loss or damage resulting from; malicious acts, escape of water from water tanks, pipes or apparatus or fixed heating system, freezing of water in tanks, apparatus or pipes, leakage of oil from a fixed heating system, theft or attempted theft, breakage of fixed glass and sanitary fixtures are all excluded after the Home has been left Unoccupied or Unfurnished for more than 60 days (with some insurers the period is longer and/or can be extended if required) in a row. Under the contents section the policy states that loss or damage resulting from; malicious acts, escape of water from water tanks, pipes or apparatus or fixed heating system, leakage of oil from a fixed heating system, theft or attempted theft, contents in the open are all excluded after the Home has been left Unoccupied for more than 60 days (with some insurers the period is longer and/or can be extended if required) in a row.
Damage caused by vermin (including moths and other insects) is a standard exclusion under most, if not all, insurance policies.
Having a water meter installed means that in addition to the fixed charge the only other money paid is for the water used. It is standard practice for Water Companies to insist that a tenant, if they would like to have a water meter, obtains written permission from their landlord prior to any pre-installation survey being carried out. Should the property have a water meter it should be read at the beginning and end of each tenancy and a record kept of the relevant readings.
A house for the reception of strangers. In the Middle Ages, a room in a monastery for the reception and entertainment of strangers and pilgrims, and for the relief of paupers. (Well – you cannot say that we are not informative – we weren’t going to be beaten by the letter x)
You, Your (Definition for Insurance Purposes)
The person (or people) named in the insurance policy schedule.
It is highly unlikely that any Landlord will have problems with the possible zoning of a particular area. However, city or county authorities do have regulatory powers in the control or the specifying of the type of use to which the property may be put in specific areas; should they wish to exercise such powers.
For expert professional advice please call a member of our team on 020 7929 0108.