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Insurance is essential!

We’re in the depths of winter in a world suffering the ravages of climate change, so extreme weather can threaten your landlords’ business – and yours too, says Frances Burkinshaw

Frances Burkinshaw

Link to Lettings insurance featureHappy New Year to everyone involved in residential lettings. Let us hope that 2020 will bring better things for the industry with full consultation on the important issues facing the industry.

November saw terrible flooding in parts of the country, particularly in Fishlake where the River Don burst its banks.

We all saw pictures on the news but many people actually lived through those days and weeks where their homes were under water.

I can’t imagine what it must be like to see your possessions ruined by flood water; people say that the smell never goes away. The heartache must be immense but will be made far worse if money is not available to repair and replace possessions.

Insure… insure… insure

Many tenants believe that it is the landlord’s duty to insure everything in a rented home. Not so!! The landlord is responsible for insuring everything that belongs to the landlord i.e. the building and any contents provided with the tenancy. That is where the landlord’s responsibility ends.

It is the tenant’s responsibility to insure their own goods – many tenants don’t do this either consciously or through lack of knowledge of their rights and duties etc.

With climate change so high up on the political agenda, comprehensive and adequate insurance has become more and more important for all of us.

Obviously insurance costs money – on top of the rent and deposit payable at the beginning of the tenancy. Many will think that they will arrange the insurance ‘next month’. But perhaps ‘next month’ never comes as there is always another call on funds and money may be tight.

The agent’s duty of care

Agents, under their duty of care to tenants, should explain the principles of insurance to tenants before they move in. Tenants should be encouraged to add accidental damage cover to their policy. By including this additional element the tenant’s deposit can be protected against charges for accidental damage to the landlord’s goods.

Frances Burkinshaw image

Frances Burkinshaw

The contents cover that the tenant may purchase will likely have the additional benefit of providing alternative accommodation for the tenant if the property becomes uninhabitable.

At such a stressful time, the knowledge that the policy will help pay for somewhere else to live could help enormously.

Where the property becomes uninhabitable the landlord’s building and contents cover will probably have the additional benefit of paying for loss of rent while the property is being dried out and repaired. This benefit may be essential for a landlord who has a mortgage to pay on the property that is let. Without that cover a landlord could suffer serious financial problems during the period that the property can’t be let and occupied.

Is the cover sufficient?

Another area which must be thought about, particularly when there is a disaster such as happened in November, is the level of cover. Insurers often warn that people do not have sufficient cover for their possessions.

I remember the floods in Uckfield and Lewes in East Sussex many years ago in October 2000. Many tenants lost all their possessions. Luckily most of our tenants opted to have contents cover through our agency BUT many did not adequately insure their goods.

For example… A tenant might have taken the minimum level of cover, say £5,000 for contents. I remember one such tenant whose CD collection alone was worth nearly the £5,000 without taking anything else into account. Loss adjusters then assessed the amount of the loss – which they calculated to be about £10,000. Due to the fact that the tenant was ‘underinsured’ by 50 per cent, the insurers were only able to pay £2,500. This came as a great shock to the tenant who had presumed that the insurers would pay out the £5,000 he was insured for.

Earth wind and fire

While parts of England were under water in November, areas of Australia were burning out of control with many people there losing their homes. Once again one has to hope that those people too were adequately insured. There are many insured risks that could happen. We insure our goods in the hope that we will never have to claim.

Remember the hurricane of 1987? I certainly do since the centre of the storm was in our area and so many of the properties we managed were severely damaged. With climate change being so high up on the political agenda adequate comprehensive insurance becomes more and more important for us all.

Residential Letting Agents need so many more skills than simply being able to ‘sell’ a let. That is probably why I always found the work so interesting; every day brought new challenges and new interesting situations.

Frances Burkinshaw is an experienced independent trainer available nationally for in-house or group training. 01892 783961 or 07887 714341 or frances@ivychimneys.co.uk

January 22, 2020

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