Landlord insurance for multiple properties: Are you underinsured?

A recent report claimed that 79% of properties were underinsured. Although this covers both the residential and commercial markets, it’s still an alarmingly high figure. To many, insurance is a necessary evil – a cost centre which they can only see the value in if they need to make a claim. The unfortunate reality is the pandemic has left many landlords out of pocket. Whether it’s from an empty property with tenants moving out and no one to fill the gap or existing tenants unable to pay their full rent and protected under the eviction ban, if you as a landlord need to cut corners financially, insurance might be the first place you look. And if you’ve got multiple properties, then it might look like an even more attractive way of saving money.

What is underinsurance?

Essentially underinsurance is when you don’t have the right insurance to cover the cost of your property or its contents. If you needed to make a claim and hadn’t insured for the full value, you wouldn’t be covered to fully replace the item or repair the damage. You might end up having to put your hand in your pocket for more than the original amount you saved on having a smaller insurance policy.

In truth, skimping on your insurance policy might make some immediate savings, but in the long run it can end up having a catastrophic effect on your investment if you suffer a loss. Below we take a look at the two main types of cover on your landlords insurance policy which might be underinsured and offer advice on how to avoid this.

Buildings

If you are looking for landlord insurance for multiple properties, you should check that your buildings sum insured on each property is sufficient not only to rebuild the home, but also any outbuildings, walls, drives, paths and so on. You will also need to allow for professional fees, materials and labour.

The sum insured you need will depend on a number of factors, including the size of the property, its age, location and the type of property, for example, detached, semi-detached or terraced. If you have a survey or mortgage report done when buying a property, they will provide a figure for rebuilding, sometimes called the reinstatement cost. In the absence of a survey or report, the ABI online rebuilding calculator can be useful. However, if your property is particularly old, listed, or of non-standard construction, extra consideration should be given as online calculators cannot allow properly for these and will not be accurate. If you’re worried about underinsurance, then speak to a member of our team who will be happy to help.

Contents

As a landlord, even if you do not furnish your property, you may still need contents cover. Typically, a Property Owners Policy will classify curtains, carpets and lighting as contents. So if you’ve provided any of these, they will not be covered unless you have requested contents cover, or if your insurer covers some contents as part of the package.

If you do furnish your property, then remember that the following items are also usually classified as contents and so you need to take account of these when calculating the amount of contents cover you need.

• Furniture, including soft furnishings
• Kitchen equipment and appliances
• Items in the garden such as tools and gardening equipment

Always calculate the replacement cost as new, as if you do need to claim, this is how your insurer will settle any replacement of lost or damaged items.

Cover for Flats and Apartments

For flats, in most cases (except Scotland where the law differs) the buildings should be covered under a separate policy covering the whole block. Your lease should detail what the buildings cover provides for, as this can vary when it comes to contents. If you do need to insure your fixtures and fittings, typical items you need to think about include any fitted kitchen, bathroom, fitted wardrobes and wooden flooring.

Why not combine your landlord insurance for multiple properties into one policy?

If you’re looking to make a saving and have multiple properties, you might be able to do this and save some time by combining all of your landlord insurance policies into one. By having your landlord insurance for multiple properties on individual policies you might have several renewal dates and various insurers. You might even be working with an insurance broker for one and an online policy for another. By combining them, you’ll have one renewal date, one initial conversation, and one price.

Advice for landlords

Ultimately, as the property-owner it is your responsibility to provide up-to-date figures in order to avoid being underinsured. At Protect My Let we understand that insurance is our world, not yours and so will always do our best to guide you through the process, which includes making sure you know what responsibilities lie with you and providing tips to help you.

You can get in touch with myself or the team by clicking here.