A very commons oversight is underestimating the declared rebuild cost of the property. It’s a high profile issue within the industry. We discuss the risk and how to avoid property underinsurance in this article.

An equally common but less prominent oversight on block of flat insurance is failing to consider the policy’s “unoccupied” terms. Even if just one flat in the block is empty, the entire property can fall under the insurer’s definition of “unoccupied.”

This matters as once a property is classed as unoccupied, insurers often:

Exclude major perils such as theft, escape of water, flood, storm and vandalism
Reduce the policy to offer FLEEA protections only. That stands for Fire, Lightning, Earthquake, Explosion, and Aircraft cover.

Commercial property insurance policies provide financial reimbursement to the owner of the building and contents in the event of damage or theft. Property Insurance is broken down into one of two levels of cover: All Risks and Named or Defined Perils. All risks cover generally applies to all losses caused by hazards that are not specifically excluded by the policy. Named or defined perils are listed in the policy and can include:

• Fire
• Explosion
• Lightning
• Smoke
• Floods/Windstorms/Hail
• Acts of terrorism
• Theft
• Malicious damage/Accidental damage
• Subsidence

Property Owners’ liability is included as standard in a landlord insurance policy with various levels of protection on offer. To read more about property owners liability please follow the link above.

To protect your property against the risks it may face, we have outlined a number of policy covers that your landlord insurance package can include:

Buildings
Landlords Contents
Subsidence
Loss of Rent
Escape of Water
Alternative Accommodation
Property Owners Liability
Terrorism

Property Owners’ Liability cover is often included in other types of insurance, but it’s not guaranteed. You’ll commonly find it as part of:

• Business or Commercial Property Packages – These usually combine buildings, contents, and liability cover.
• Landlord Insurance – Designed for rental properties, this often includes property owners’ liability as standard.
• Combined Buildings and Contents Policies – For businesses or landlords, these may also include liability protection.

If you own a property  or properties this cover is essential to protect you against claims for injury or damage. Because every insurer and policy is different, when insuring your business and the contents of your premises with landlord’s insurance, check your policy documents or ask your broker to make sure Property Owners Liability is included as part of your package.

Your property is subject to many risks, including structural changes and even disputes with your tenants. By purchasing a property owners insurance policy with Plan, you can make sure that you are protected against these risks. No matter if it’s a one-off residential let or part of a large commercial property portfolio, we can arrange comprehensive cover with our leading insurers at a highly competitive premium.

At Plan, we offer commercial property insurance packages to comprehensive protect your business against inherent risks. We will tailor your insurance policy to cover you against potential claims that your business  may encounter.

Let us know your business needs, so we can provide you with a bespoke quotation at a competitive premium from our panel of industry leading insurers.

Having the right property insurance in place with correct up to date document templates and guides can help you minimise the risk and liabilities that can take a huge hit on your profits.

At Plan we offer our clients property and landlord risk management services. These can include personalised health and safety documents, risk assessments, method statements along with many other practical applications, with the aim of aiding your business’s operations. These documents are made available to you when you take out a policy with Plan.

The document library includes business continuity templates that are updated annually. You can use this service as a guide to support your business’s compliance function.  With this service, you will also receive regular notifications regarding legislation changes that are relevant to your business.

Buildings insurance will cover the cost of repairing damage to your property including floors, walls, permanent fixtures and roofs in the event of damage or a theft taking place. Buildings insurance will be included as part of a property owners policy. If you are about to commit to a mortgage on a property purchase evidence of your buildings insurance will be required by your lender.

To protect against the threat of underinsurance you should accurately evaluate the declared cost of rebuilding your property. Our article on the topic provides further information and guidance.

Landlords contents insurance will cover the contents within your buy-to-let property if they are stolen or damaged. When renting out your buy-to-let property it is advisable to make sure all your contents within the property is covered against damage and theft. This would include all items that are placed in the property to furnish it, for example – furniture, decorations, TVs, carpet etc. At Plan, we work with leading insurers to provide you with comprehensive protection, tailored to meet your specific needs.

You may want to consider including terrorism cover with your property owner’s insurance. Destructive acts such as terrorism, insurrection, revolution and civil war will be excluded by most standard policies.  Terrorist acts that are covered under the terrorism risk insurance act are certified by the secretary of the treasury.

Terrorism cover will need to be specifically requested to ensure it is in place. Terrorism cover can protect you against any costs occurring from property destruction or damage, business interruption and any liabilities arising from a claim. At Plan, we work with leading insurers to provide you with comprehensive protection, tailored to meet your specific needs.

If you own a property that you either reside in, rent out or use as a business premises then ideally you should insure your property against subsidence. Cover will protect you against the costs of repairs or damages that came from a subsidence claim.

However, subsidence cover isn’t always offered by insurers and certainly isn’t always included as standard. In many cases, it can be added to your Property Owners policy. It’s an important protection because subsidence, when the ground beneath your property shifts, can cause serious structural damage.

Whether it’s available will depend on your  property’s history and location. Some insurers may require extra checks or charge an additional premium, especially if the property is in an area with higher subsidence risk.

Your broker or insurer can confirm if subsidence cover can be added and what conditions apply. If it’s not included, they’ll advise on the best way to arrange it.

Common signs of subsidence are, cracks in the ceilings, walls and outside brickwork. If any existing cracks start to expand this is a further indication that subsidence may be occurring. There are a few ways to help minimise your risk of subsidence. They include, inspecting your property regularly to check for leaks and blocks in guttering and pipework, removing trees that are planted close to your house or trying to regularly maintain them.

A surveyor will be required to assess whether movement is occurring over a period of time. If your property is confirmed as having suffered damage from subsidence and you have suitable cover in place, you will be able to claim on your insurance policy for the cost of repairs up to the sum insured.

One of the most frequent causes of damage to a property is from an escape of water. These damages arise from burst pipes or one of your appliances leaking. A quality property owners policy should ensure protection is in place to cover you against the cost of repairs.

Some landlords policies will include escape of water as standard, while others might have limits, exclusions, or require you to add it as an optional extra. It’s important to note cover for damage that has resulted from poor maintenance is likely to be excluded. Additionally, cover might not apply if the property is left empty for a long period.

Check your policy documents or ask your broker to discuss this element of cover. Your broker will confirm what’s included and whether you need to make any adjustments to stay fully protected.

Whilst renting out a property, a major concern for any landlord will be the threat of missing out on monthly rental income. It’s important to note that both “loss of rent” and “rent gaurantee” cover can be valuable protections, but they address different risks.

Your landlord policy will unfortunately not cover unpaid rent by your tenants. By taking out a policy providing loss of rent cover you will be protected against any loss or damage caused by insured events. This includes circumstances such as a fire or flood that results in your tenants being unable to live in the property.

Loss of rent cover will not protect you in the event your tenants do not pay their rent. It helps replace the rental income you’d lose while repairs are carried out.

This is the key difference between loss of rent cover and rent guarantee insurance. A landlord policy’s “loss of rent” cover will unfortunately not cover unpaid rent by your tenants. However you should be able to purchase “Rent Guarantee Insurance” which will cover your monthly rental income if your tenants do not pay.

Strict terms often apply to rent gurantee protection policies, for example in some cases a minimum of a 2-3 month minimum period of non rent payments will be necessary before a claim will be eligible. Monthly rent limits of up to £2,500–£3,500 per month may also be stipulated. Although additional benefits can include legal expenses to cover the cost of eviction proceedings and court action, often up to £50,000.

When considering renting your property, there are checks you can carry out to provide extra confidence in the ability of your tenants to meet their rent payment, such as: background check, credit check, contact previous landlord of the tenant, contact tenant’s employer and interview the tenants.

Alternative accommodation should be covered under a quality buildings insurance policy. You will also be protected under some contents policies but the cover limits are usually lower than a buildings insurance policy.

Should your property suddenly became uninhabitable due to flood, fire, storm or another event you could be left without accommodation to move into straight away. By taking out alternative accommodation cover you will be protected against the costs you may have to pay for temporary living arrangements.

If a member of the public suffers an injury that is linked to your property, then property owners liability will protect you against any damage costs that may arise. Likewise if your tenants are injured within your property, then you will be covered for any injury claims under property owners liability. Cover for property owners liability will be included as part of your landlords insurance policy.

In order to arrange insurance for a block of flats it’s crucial that you know: the estimated rebuild cost (in the event of a total loss), the cladding material used externally (if any is in situ) and the construction type. Some useful online tools do exist, for example the Association of British Insurers provide an online rebuild cost calculator. However you may need to consult with an expert surveyor to ascertain this information.

To provide you with a landlord insurance quote indication you will need to provide an estimated rebuild cost and the construction type of the property in question. Further details such as proof of claims history etc. will be required should you wish to proceed with incepting cover.

In addition to the estimated rebuild cost and the construction type of the commercial property we will require the intended business use of the property i.e. what commercial activity will be taking place on the site. It is unlikely that any particular trade will prevent cover being offered as we work with an extensive number of insurers.

We have a number of insurer partners that are happy to provide insurance for unoccupied properties. In addition to the standard questions for property insurance they will want to know the intended business use for the property once it is reoccupied and how long the property will either spend being redeveloped or what period it will lay empty for.

If the property is empty for over 30-60 days (the period will depend on the insurer in question) then they are likely to require that it is visited regularly to ensure that it is well maintained. You will be made aware of the specific requirements of your unoccupied property insurance policy wording.

Insurers will typically request that the mains water supply is turned off and systems are drained, your regular visits to the unoccupied premises will need to be recorded and any alarm system should remain in use.

It’s important to be aware that in the event of a claim, if the insurer’s stipulations have not been adhered to, then your insurer could void the policy and repudiate your claim. If the property remains unoccupied and your insurer is aware that it cannot be visited regularly they are likely to apply what are known as Fire, Lightning, Earthquake and Aircraft (FLEA) risk exposure restrictions to your policy. This will remove cover for risks such as theft, flood and malicious damage.

Landlords will benefit from both the added convenience and the economy of scale that comes with a property portfolio insurance policy. To obtain an indicative quotation, either yourself or the managing agents involved in running the portfolio, will simply need to provide a breakdown of the properties’ rebuild values, the mix between residential, commercial and industrial properties and whether plans exist to redevelop any of the sites.