As a landlord in Edinburgh, it’s important to ensure that your buy to let investment is adequately protected. Specialist Landlord’s Insurance is vital to safeguard you — and your bank balance — from an unexpected event that could lead to an insurance claim.
So, what’s included in a Specialist Landlord’s Insurance policy?
A key section of the policy is cover for the building itself; the bricks and mortar, providing protection for damage to the physical structure of the building in the event of an insured loss. Buildings by definition includes cover for the walls, roof and permanent fixtures, such as a fitted bathroom or kitchen.
Property Owners Liability
Another important aspect of the policy is Property Owners Liability, which provides cover for the landlord if a third party holds you liable after a member of the public is injured, or their property damaged, whilst on the property. For example, if a loose tile has not been repaired property and a visitor trips and seriously injures themselves, they could sue the property owner for damages.
Landlords also have the option to add cover for any contents in the property belonging to you, including basic furnishings, electronic equipment, curtains and carpets.
Loss of Rent
A crucial part of any landlord’s policy is cover for lost rental income should your property become uninhabitable following an insured incident, such as a fire or escape of water. Alternative accommodation for your Edinburgh tenants should also be included as standard, should you need to temporarily re-locate your tenants elsewhere in the city whilst your property is being repaired.
Keep in mind…
Your investment property in Edinburgh may become unoccupied at some stage, either for renovation, repairs or a natural gap between tenancies. Some insurers will look to restrict cover during the period that your property is empty, highlighting the importance of considering a policy that provides full cover, without restriction, for a longer period such as 90 days. Also, look for a policy that will include important covers such as accidental damage or malicious damage or theft by tenants, as standard – as some insurers will look to charge an additional cost.
A common reason for reporting a claim is an escape of water in the property, so consider a policy that not only carries a low excess for this type of loss, but also includes ‘trace and access’ cover as standard. This provides cover for the cost of locating and accessing the source of a leak, such as a burst pipe under floorboards or concealed behind bathroom tiles.
Numbers are important.
It is the landlord’s responsibility to ensure the buildings and contents are insured for the correct amount, so in line with the Royal Institute of Chartered Surveyors (RICS) guidance, you should have your property professionally surveyed every 3-5 years to establish an accurate ‘reinstatement’ cost of your building. ‘Reinstatement’ means how much it would cost to completely rebuild your property to its original condition if it was destroyed beyond repair.
So, in the event of a major incident such as a fire, you will be appropriately covered without incurring a proportionately reduced claim payment due to the property being underinsured, known as the ‘average’ clause.
What is Index Linking?
Index Linking is an insurer provision to apply a percentage uplift the reinstatement value at renewal to account for economic changes to building materials, labour, costs and fees.
It’s intention is to protect the property owner from underinsurance and the percentage level is generally calculated by insurers after referring to various indices, such as the BCIS House Rebuilding Cost Index, which operates under RICS.
Index Linking is currently higher than usual, which is due to the increasing costs of building materials and fees.
What’s not covered?
The policy won’t provide cover for;
- Your policy excesses
- Gradual wear and tear over a prolonged period
- Any contents belonging to your tenant
Should you need to report a claim on your Edinburgh property, it’s important that your claim is handled quickly, efficiently, and fairly. It's valuable to partner with a provider who values the importance of their claims service, or a broker that has delegated authority to handle claims in-house.
Clan Gordon has established a partnership with Bruce Stevenson, a local, leading insurance broker that specialises in arranging landlord’s insurance.
Bruce Stevenson can provide a specialist policy that includes all the above features mentioned in this article. If you would like a no-obligation quotation, please contact your Property Manager at Clan Gordon, or our representative at Bruce Stevenson, Danielle Richards on 0131 553 9997 or at Danielle.Richards@BruceStevenson.co.uk