Page 102 - LCNL Diwali Magazine 2022

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Landlord Insurance Goes Further Than You Think

Currently, there is no legal requirement for Landlords in England or Wales to have any form of
insurance. But it does not make any sense to forgo the policy; pay a few hundred pounds a year for

insurance, or stand to lose your entire investment and rental income by an accidental fire. Not to

mention you’ll still be liable to pay the mortgage for a burnt down building.

Having a buy-to-let property is probably your biggest investment so you should be protecting your
money from unexpected dilemmas (which sadly is more common than you would think). There are
a number of these dilemmas you can protect yourself from, from protecting your rental income
to the building itself.

Protect the rental income for your investment property
Rent Guarantee insurance, often referred to as rent protection insurance is a form of cover that acts as a safeguard should your

tenants be unable to pay their rent. With the cost of the living crisis on our doorstep, you and your tenants will likely be feeling
the pinch.

Whilst it’s natural to be sympathetic, your rental income still needs to be paid. If tenants can’t or won’t pay, you need to be
protected. You know the importance of protecting your rental investment and there is a range of insurance products to give
you peace of mind:

Rent Guarantee Insurance

Rent Guarantee Insurance gives you peace of mind that if your tenant defaults, you’ll continue to receive the full rent amount

each month (up to a specified limit). This provides financial protection for you no matter what happens to your tenant’s finances.

Loss of Rent Insurance
Loss of Rent Insurance protects against an insured event, such as a flood at the property. With Loss of Rent, if the tenant has

to move out, the insurer will cover both the cost of repairs and lost rent for the period the property is uninhabitable up to the
limit you choose.

The building insurance clause you don’t know about
In the UK more than 80% of properties are underinsured, this poses a strong problem due to the ‘The Condition of Average’

or more commonly known as ‘The Averages Clause’. To put it simply, if your building is insured for an amount that’s too low,
your insurer can reduce how much they’ll pay out. If the property is heavily underinsured it can be grounds for your insurer
to reject your claim entirely. This leaves you responsible for repairs or rebuilding the property all while you continue to pay the
mortgage and other costs involved.

To worsen this, the construction market has been faced with a perfect storm, Brexit and the Pandemic have resulted in labour

and materials shortages driving costs higher and higher. This leads to more and more properties being underinsured, to avoid
this, it is recommended you get a professional assessment of your building value to rebuild the property from scratch including;
materials, labour, demolition, and all professional fees.

Don’t leave your insurance up to chance – get it reviewed annually by a trusted professional.

NIRAJ MAMTORA
FORUM INSURANCE