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Be aware of factors that can affect the cost of landlord insurance

As with most types of insurance there are some factors that providers will take into account when processing a quote, and these may increase or decrease your overall premium.

It is important to bear this in mind both when purchasing landlord insurance for the first time as well as when it comes to renewal — you may find you are faced with a significant increase if you’re not careful!

Here are some common factors that will typically affect the overall cost of landlord insurance to help you stay in your insurers good books:

  • Number of claims: an extensive claims history signals to insurers you are more likely to make a claim in the future, increasing your premium. An easy way to save money is to try and avoid making multiple small claims if possible and ask yourself whether you can feasibly resolve the issue by paying out of pocket
  • Tenant type: some types of tenant are seen as ‘more risky’ than others, for example students and those who are unemployed. As a result, you will find the cost of landlord insurance to be higher if you rent out your property to these groups
  • Tenant referencing: tenant referencing is a crucial part of the lettings process, as it is your chance to screen for any potential problems before an agreement is signed. Many insurers will only provide some types of insurance subject to sufficient pre-tenancy checks having taken place, and you will find the cost of your premium will change depending on how thorough these checks are. We found carrying out proper tenant checks (e.g. credit checks, tenant references and right-to-rent checks) could save you up to 15% on your landlord insurance. It’s also important to note that in many cases you can only claim on certain types of cover (such as malicious damage by tenants) if these checks have taken place — this is an easy way to be caught out!
  • Type, age and location of your property: these are all things that will affect the cost of your premium — older properties for example tend to be the most costly to insure as they are often aren’t built according to the same safety standards as modern properties, meaning they are more expensive to put right! Similarly, some property types are cheaper to insure than other — research conducted by NimbleFins found that semi-detached houses are on average the cheapest to insure whilst an individual flat in a converted building is most expensive!
  • Rebuild cost: the cost of your landlord insurance is directly impacted by the rebuild cost of your property — the amount of money required to rebuild a building if, say, it is damaged beyond repair in a fire. Note, this is not the same as the market value of your property! Unsurprisingly, properties with a higher rebuild value are more expensive to insure as your insurer could face larger losses in the event you need to claim. Ensuring you get an accurate rebuild cost is crucial to avoid unnecessarily high premiums, and there are plenty of free resources online to help with this
  • Your insurance excess: in a nutshell, this is the amount of money that you, as the policyholder, have agreed to pay towards any claim you make. You’ll have a compulsory excess that is determined by your insurance provider and a voluntary excess, which is optional. Look out for this when obtaining quotes for landlord insurance — the more you are willing to pay towards a claim the lower your overall premium. So, if you can afford to do so this is an easy way to save some money
  • Adequate security: as standard, insurers will expect you to have good quality windows and doors with secure locking mechanisms in place. Having additional levels of security means you are less likely to have to make a claim associated with theft and burglary, which will reduce your premium overall, so be sure to look out for this.

Don’t get caught out by policy exclusions

An important thing that can be easily overlooked when purchasing landlord insurance is remembering to take a look at your list of policy exclusions i.e. what events aren’t covered by your insurer should you need to make a claim. This is crucial as you may find that your policy doesn’t cover what think it does, which could result in you having to pay a lot of money out of pocket to resolve any issues!

Policy exclusions tend to be clearly listed in your landlord insurance documentation so ensure you spend some time getting familiar with these. Whilst there are some understandable exclusions, e.g. most insurers won’t cover general wear and tear as this is to be expected, there are others that tend to catch landlords out.

Take this scenario, for example:

  • If you find that there is a leak in one of your rented properties and you wish to make a claim, you may find that your policy will cover the costs of fixing the damage caused by the leak, rather than the leak itself. It sounds almost counter-intuitive and may lead to you to becoming quite annoyed with your insurance provider when they tell you this is outlined in your policy documentation.

Be sure to get into the habit of reading your policy wording carefully. Whilst it may not be the most fun task out there it may certainly save you a lot of money in the long run!

Keep a note of your unoccupancy period

Another key piece of information many landlords overlook is the unoccupancy period stated in their policy — this is the maximum length of time your property can be left vacant and in which your insurance will still be in place.

Some landlord insurance providers will insure a vacant property for up to 30 days whilst others have an extended unoccupancy period of up to 120 days. So, why is this important? Well, typically if your rental property is vacant for a longer period of time than that which is stated in your policy, any claims you make during for damage or less occurring within this time-frame won’t be covered.

Overlooking a simple detail such as this could end up costing you a lot of money if you make a claim believing your insurance will cover this, only to find out your cover was restricted the moment your property became vacant!

Watch out for hidden fees

When signing any sort of agreement one piece of advice is always given — make sure you read the fine print!

Landlord insurance is no different, and hidden or ‘sneaky’ fees are most certainly on your list of things to look out for. Some providers will attempt to hook you in with low premiums whilst simultaneously including lots of additional charges elsewhere, for example, cancellation fees.

Whilst you can’t avoid these altogether it is definitely worth factoring these in so as not to be surprised further down the line as these admin fees can add up quickly. Here are some common things to watch out for:

  • Cancellation or change of contract fees: many insurers will charge a fee if you wish to cancel your policy with them, whilst others will even charge you if you wish to change the details on your landlord insurance policy, for example, the name of a tenant!
  • Interest rates when paying monthly: one of the easiest ways to save money on landlord insurance is to pay the full amount upfront. This is because insurers will often charge interest if you decide to pay in monthly installments meaning your overall premium could be significantly more than you originally thought.
  • Limits on cover: it may seem obvious, but this is another detail that can be easily overlooked. Most types of landlord insurance will come with a limit on the amount you can claim, so anything above this means you will have to pay out of pocket!

Check out the Defaqto rating

Defaqto is an indpendent business providing information to consumers in the financial services industry. They compare a wide variety of services and products before assigning them a Defaqto star rating, their measuring system for the quality of said service or product.

Defaqto’s analyst teams scour the UK market, scanning through terms & conditions, small print and policy wordings to understand the benefits and limitations of each individual product. As a result it has earned a reputation for being one of the best indicators of product quality.

When comparing quotes for landlord insurance and researching different providers it is well worth taking a look to see what rating is has been awarded by Defaqto (if any!). A 5 star rating indicates that Defaqto’s experts deem it to be one of the best products on the market, 3 stars represented an ‘average’ product and a 1 star rating means the product is seen to provide only the basics.

However, it is important to do your own research, too. Defaqto, whilst an excellent indicator of quality, does not take into account things such as cost which may be a deciding factor for more price-sensitive landlords. Looking at customer reviews and ratings is an excellent way to get a better understanding of how well a product performs, which brings us onto our next piece of advice…

Make use of customer reviews and ratings

Whilst a Defaqto rating gives you an unbiased view of a product’s overall quality, another excellent way to see whether a company or policy is right for you is to see what it’s existing customers have to say.

There are many websites out there dedicated to compiling customer feedback such as Trustpilot and Feefo. This makes it even easier to see which companies are performing well in terms of customer experience and which are leaving their customers frustrated and looking elsewhere.

Some things you might want to look out for when sifting through company reviews include call wait times, how easy it was to make a claim, friendliness of staff and how likely they are to recommend this product or service to others. This way you can get a good idea of whether customers really do place trust in a company, and can make your decision of which insurance provider to opt for much easier!

The importance of good customer service

Our last piece of advice as to what to look out for when purchasing landlord insurance is to remember the importance of good customer service. This is especially true in the event of an emergency (e.g. the boiler breaks down in the middle of winter!) and you need to get a hold of someone quickly to resolve the issue.

There are some little things to watch out for when researching an insurance company—for example, is their claims or customer service line open 24/7 so you can speak to someone and get advice when you really need it? Are the call centres based in the UK or overseas? A UK-based claims service means a company has more direct control over the quality of it’s service, meaning you are more likely to receive a more positive experience!