Article posted on 27 February 2015
As a landlord, insurance claims can be a tricky business. It’s not just about you and your insurance company. You also have your tenants and their role to consider. The level and scope of cover, plus the different party’s financial obligations can cause a few headaches! In this article we look at some of the most common questions landlords have asked us at National Home Repairs.
Sometimes it can be difficult to clearly define wear and tear. Different people can have their own definition. However a broad definition is the ‘gradual deterioration of your home or home contents’. For example, if you sit on your sofa one thousand times over the course of a year, your sofa will gradually deteriorate.
In the vast majority of cases home insurance policies do not cover wear and tear by any party (including a tenant). There are some specialist insurance policies which may cover wear and tear of specific items, but this is not considered standard practice.
Even if a tenant is responsible for the damage (for example leaving a tap running causing water damage), they are not liable to pay the insurance excess. As the landlord you are responsible for covering the insurance excess as part of your policy.
It’s every landlord’s worst nightmare, so we hope this never happens to you! Not only is there the initial hassle and cost to repair the property, but if the repairs are lengthy, it can stop new tenants from moving in.
Some policies do cover malicious damage by tenants, some do not. In our experience there are more policies do not include this, than policies that do. Of those that do, many insurers will cap the repayments at approximately £5,000 - but remember you will still have to pay the excess (see above).
Our advice is to carefully check your policy, as this can often be a point of contention between landlords and insurers. Some insurers will only cover certain types of malicious damage, and most have relatively low limits on payouts.
In most cases no, carpets are not covered by buildings insurance. Carpets and some other types of flooring are covered by contents insurance and not buildings insurance. Even though you should have a buildings insurance policy, you may not have a contents insurance policy - so you are relying on your tenants to have a contents insurance policy. You may wish to think about taking a contents insurance policy as a landlord to cover carpets and flooring - they are one of the leading causes of accidental damage insurance claims by tenants (red wine stain anyone?).
Yes, always have a lease. Even if friends and family are staying in your property, it is vital that you have a lease. An insurance company will always ask to see a copy of a lease before processing any home insurance repair claim.
Insure your property for it’s current value. This might sound a little simplistic but it does catch some landlords out.
Take this scenario, as a landlord you purchase a property for £75,000 and you insure it to cover this amount. Over a period of time you renovate the property so it later has a value of £100,000. Let’s assume you don’t update your insurance policy to reflect this and you’re unfortunate enough to have a insurance claim costing £10,000.
You might think that your property is covered for £75,000 so a claim of £10,000 isn’t an issue. However with some insurers it is! Some insurers may refuse to pay £10,000, instead only paying out £7,500 (you’ve only insured your property for 75% of it’s current value). There are rarer cases where an insurer may not pay out at all!
Keep your insurance policy up to date with the latest valuation of your property.
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