Owning property can be a valuable long-term investment, but it also comes with financial risks that are easy to underestimate.
A fire, flood, burst pipe or serious storm can result in substantial repair costs. If the property is rented out, an insured incident could also leave you without rental income while repairs are completed. Add potential liability claims, damaged contents, periods when the building is unoccupied and the responsibilities involved in managing tenants, and the importance of arranging suitable insurance quickly becomes clear.
Property owners’ insurance is designed to bring together the protection needed for properties that may not be adequately covered by a standard home insurance policy.
Whether you own one residential rental property, a portfolio of houses and flats or commercial premises, your insurance should reflect the property itself, how it is occupied and the financial risks you would face if something went wrong.
What Is Property Owners’ Insurance?
Property owners’ insurance is a broad form of insurance designed to protect buildings owned as investments or let to other people or businesses.
Rather than being a single standard policy, cover can usually be tailored around the individual property and the way it is used.
This can include:
- Buildings Insurance
- Landlord Contents Insurance
- Fixtures And Fittings
- Property Owners’ Liability
- Loss Of Rent
- Accidental Damage
- Malicious Damage
- Legal Expenses
- Unoccupied Property Cover
- Alternative Accommodation
- Emergency Assistance
Not every policy will automatically include every type of protection. Limits, excesses, conditions and exclusions can also vary considerably between insurers, which is why the details of the cover matter just as much as the premium.
Buildings Insurance
The building itself will usually be the largest asset requiring protection.
Buildings insurance can cover the cost of repairing or rebuilding the property following insured events such as fire, storm, flooding, escape of water and other specified risks.
Depending on the property and policy, buildings cover can extend beyond the walls and roof to permanent features including fitted kitchens, bathrooms and other fixtures forming part of the building.
One important consideration is the rebuild value.
This should not simply be confused with the property’s sale price. Rebuilding costs take account of factors such as materials, labour, demolition, site clearance and professional fees. The Association of British Insurers recommends reviewing rebuild costs at renewal and following significant alterations or extensions. uring a property for an inadequate amount can result in underinsurance and potentially leave the owner responsible for part of a loss.
Contents, Fixtures and Fittings
Buildings insurance protects the structure, but property owners can also have significant amounts invested inside their properties.
A furnished residential property might include:
- Beds And Furniture
- Carpets And Flooring
- Curtains And Blinds
- White Goods
- Appliances
- Freestanding Furniture
Commercial properties can present different requirements depending on what the property owner provides and what belongs to the tenant.
Landlord contents insurance can provide protection for belongings owned by the property owner. It does not normally insure a tenant’s personal possessions, which are generally the tenant’s responsibility to insure.
It is therefore important to establish exactly what belongs to you and make sure the sums insured accurately reflect its replacement value.
Property Owners’ Liability Insurance
Owning a property can also expose you to claims from other people.
Property owners’ liability insurance is intended to provide protection if a third party suffers injury or property damage and you are found legally liable as the property owner.
For example, a tenant, customer, contractor or visitor could suffer an injury allegedly caused by a defect or unsafe area within the property.
A liability claim can involve more than compensation. Legal representation and associated defence costs can also become significant.
The appropriate level of liability cover will depend on factors such as the type of building, its occupants, how it is used and the potential exposure presented by the property.
Loss of Rent
Property damage does not necessarily end when the repair bill has been paid.
For a landlord, serious damage can also stop the property generating income.
If an insured event makes a rental property temporarily unsuitable for occupation, loss of rent insurance may compensate for rental income lost during the period covered by the policy.
Imagine a major escape of water damages several rooms and the tenant has to move out while repairs take place. Even if the building repairs themselves are insured, several months without rent could create another substantial financial loss.
Loss of rent cover can therefore be particularly important for owners who depend upon rental income to meet mortgage payments and other property-related costs.
The amount and period covered vary between policies, so these limits should be considered carefully rather than automatically accepting a standard figure.
Accidental and Malicious Damage
Not every form of damage is automatically covered by a property insurance policy.
Accidental damage may be offered as standard by some insurers and as an optional extension by others.
Similarly, landlords should check exactly how their policy deals with malicious damage caused by tenants or other people.
The distinction matters.
A property can suffer expensive damage without a fire, flood or storm ever taking place. Checking these areas before taking out the policy can prevent an unpleasant surprise when a claim occurs.
Insurance for Unoccupied Properties
Empty buildings present a different risk to occupied properties.
Water leaks can remain unnoticed for longer. There may be an increased risk of vandalism, theft or unauthorised entry, and small maintenance problems can become more serious before anybody discovers them.
Many standard property policies place additional conditions or restrictions on cover when a building remains unoccupied beyond a specified period.
This can be relevant when:
- A Tenant Has Moved Out
- A Property Is Being Renovated
- A Building Is Awaiting Sale
- A Commercial Unit Is Between Tenants
- Probate Is Being Completed
- Extensive Building Work Is Underway
If you know a property will be empty, speak to your broker or insurer rather than assuming the existing policy will continue unchanged.
Commercial Property Owners’ Insurance
Commercial properties can require a different approach from residential lets.
West Craven Insurance can arrange cover for owners of properties including shops, offices, restaurants, hospitality premises and other commercial buildings.
Commercial property insurance can provide protection against insured damage to the building and, where appropriate, contents belonging to the property owner. The Association of British Insurers identifies buildings and contents as the two principal areas of commercial property insurance. ever, the appropriate cover depends heavily upon the premises and its use.
A small office building presents a very different insurance risk from a restaurant, warehouse or mixed-use property. Insurers may therefore need information about the tenants, trade carried out from the premises, construction of the building, security arrangements and claims history before offering cover.
Residential Landlord Insurance
A property that you live in and a property that you rent to somebody else are not necessarily treated in the same way by insurers.
Landlord insurance is designed around the additional risks associated with letting property.
Buildings insurance remains central, but landlords may also want protection for contents, property owners’ liability, loss of rent, legal expenses, emergency assistance and other landlord-specific risks.
Landlord insurance itself is not generally a legal requirement, although a mortgage or other agreement may require suitable buildings or specialist landlord cover. is also important to remember that insurance does not replace a landlord’s legal responsibilities. Landlords must continue to comply with the relevant property safety, maintenance and tenancy requirements applying where the property is located. Holiday Lets and Short-Term Rentals
Short-term accommodation can present different risks again.
A holiday property may have a much higher turnover of occupants than a conventional residential tenancy. There can also be regular periods of vacancy, different liability exposures and different expectations surrounding furnishings and contents.
If a property is used for holiday accommodation or short-term letting, the insurer should be told exactly how it is being used.
Do not assume a standard residential landlord policy will automatically provide suitable protection.
Covering Multiple Properties
Property portfolios can become increasingly complicated to insure individually as they grow.
If you own several rental or commercial properties, it may be possible to arrange portfolio insurance covering multiple buildings under a single insurance programme.
This can make administration easier and provide a clearer overview of renewals and insurance protection across the portfolio.
A portfolio may also contain very different risks.
For example, one owner might have residential houses, flats, commercial premises and temporarily unoccupied buildings. Each property’s occupancy, construction, use and rebuild value still need to be accurately declared even when they form part of a wider portfolio policy.
Are You Underinsured?
One of the most important questions property owners should ask is not simply whether they have insurance, but whether they have enough insurance.
Property values, rebuilding costs, materials and labour costs change over time. Improvements to a building can also increase the amount needed to reconstruct it following a major loss.
The insurance arranged several years ago may therefore no longer accurately reflect today’s rebuilding requirements.
Property owners should consider reviewing their sums insured when:
- Renewing Their Insurance
- Completing An Extension
- Carrying Out Major Renovations
- Changing The Property’s Use
- Changing Tenants Or Occupancy
- Purchasing Additional Properties
- Adding Valuable Fixtures Or Contents
- Leaving The Property Unoccupied
Regular reviews help ensure the information supplied to the insurer continues to represent the property accurately.
What Information Will an Insurance Broker Need?
Providing accurate information helps an insurance broker understand the risk and identify suitable cover.
Depending on the property, you may be asked about:
- The Property Address
- Rebuild Value
- Type And Age Of Construction
- Residential Or Commercial Use
- Type Of Tenant Or Occupant
- Number Of Properties
- Previous Claims
- Security Measures
- Flood Or Subsidence History
- Periods Of Unoccupancy
- Contents Belonging To The Property Owner
- Rental Income
- Planned Renovation Or Building Work
Changes should also be reported during the policy period where required by the terms of the insurance.
Choosing Property Owners’ Insurance
Price will always be a consideration, but the cheapest property insurance policy is not necessarily the most suitable.
Look carefully at what is actually being insured.
Check the sums insured, excesses, exclusions and conditions. Consider what would happen to your finances if the property could not be occupied for several months. Think about liability exposure and whether the building could be left empty between tenants.
Most importantly, make sure the insurer understands exactly what the property is used for.
Property Owners’ Insurance From West Craven Insurance
No two property portfolios are exactly the same.
At West Craven Insurance, we work with property owners to understand the buildings they own, who occupies them and the risks that need to be considered before recommending suitable insurance options.
We can assist owners of residential and commercial property as well as landlords with multiple properties, holiday lets and properties that may remain unoccupied for extended periods.
Rather than relying on a one-size-fits-all policy, we can help you examine the different areas of protection available and arrange cover appropriate to your circumstances.
If you would like to review an existing property owners’ insurance policy or obtain cover for a new property, contact West Craven Insurance and speak to our team.
