Demolishing landlords insurance myths

November 6, 2012

Landlord Information

At CIA Insurance, we occasionally encounter misconceptions relating to the very nature of landlords insurance.

Here are some of the more common ones and our view as to reality.

Landlords insurance is optional

This may be overly simplistic and sometimes fundamentally incorrect.

Although there may be no legal obligation to insure your buildings or contents, if you have any form of mortgage on them you may find that your loan agreement obliges you to maintain full buildings cover up to and including the costs of total demolition and subsequent rebuilding.

If you fail to keep cover in place, you may be in breach of contract.

Note also that in some forms of social or controlled tenancies, you may be obliged to keep certain minimum levels of third party liability in place.

Even if it is not a legal requirement, having something as valuable as your property sitting uninsured might be a questionable position to adopt.

You can find cheap policies that offer everything that more expensive ones do

The brutal reality of life is that this proposition might simply not hold water in some circumstances.

From our everyday experience of life we tend to know that there might be a tendency to get the quality of goods or services that you pay for.

What this means is that there might well be a relationship between the quality of cover provided by a policy and its premium.

Of course, it is perfectly legitimate and indeed desirable, to compare a number of policies against each other to find one that offers you the best balance of price versus cover provided.

That is called finding a cost-effective solution and it is not the same thing as saying that cheap landlords insurance cover is as good as that provided by more expensive policies.

You can get by with owner-occupier policies if you stay resident in the property yourself whilst letting out another part of it.

This is typically incorrect.

A standard owner-occupier policy will typically become immediately invalid the moment you start using your property or any part of it, for the purposes of generating rental income.

You can let to any type of tenants you wish

In the case of some policies, that might also be incorrect.

Some providers may only cover certain categories of tenant or more accurately, may exclude certain categories of tenant from cover.

Examples of such excluded categories might cover groups such as DSS tenants or students.  Some might exclude asylum seekers etc.

Fortunately, some policies do offer all tenant cover and depending upon your target market segments, these policies might be worth looking for.



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