The Ultimate Guide to Property Insurance for Property Investors

Welcome to another edition of The Business Owners' Property News - my weekly newsletter dedicated to helping business owners and busy professionals get started in property investing.

As a property investor, insurance is one of the most critical considerations to safeguard your investment.

Whether you’re buying your first rental property or expanding your portfolio, ensuring your property is protected against unforeseen events is vital.

Here’s what you need to know - and a comprehensive list of the key information insurers will require - to secure the right policy for your property.

Why Property Insurance is Non-Negotiable

Your property is a valuable asset, and without proper insurance, you’re leaving yourself vulnerable to risks such as:

• Damage caused by fire, flooding, or subsidence.
• Theft or vandalism of property contents.
• Liability claims from tenants or third parties.
• Loss of rental income during repairs or due to unforeseen circumstances.

The right insurance policy isn’t just a legal safeguard; it’s peace of mind that your investment is protected against the unexpected.

What to Consider When Getting Property Insurance

Here are the key areas you’ll need to address when choosing a policy:

1. Background Information

Insurers will require personal and background details, such as your history with previous insurance policies, claims, or financial issues. ?? Be transparent about any prior claims, CCJs, or other relevant factors, as withholding information could void your policy.

2. Property Details

You’ll need to provide specifics about the property, including:

• Property Type (e.g., house or flat).
• Construction Details (e.g., brick walls, tiled roof, percentage of flat roofing).
• Year Built and Rebuild Value (including demolition and site clearance costs).
• Flood or Subsidence History in the area.

?? Tip: Use a qualified surveyor to assess the property’s rebuild value and identify potential risks like subsidence or flat roof vulnerabilities.

3. Tenant and Occupancy Information

The type of tenants and how the property is occupied significantly impact the type of insurance you’ll need.

• Is the property let on a single AST (Assured Shorthold Tenancy) or as an HMO (House in Multiple Occupation)?
• What type of tenants will reside there (e.g., working professionals, students, supported living)?

?? If you’re operating an HMO, specialized HMO insurance is crucial. Standard landlord policies may not cover shared housing.

4. Contents and Rental Income Cover

• Contents Insurance protects items like furniture and appliances provided for tenants.
• Loss of Rental Income Cover ensures you’re not financially impacted if the property becomes uninhabitable.

Additional Considerations for Renovations

If you’re planning any renovations or structural work, inform your insurer in advance. Policies often exclude coverage for damages incurred during major works.

• Provide details of the scope, duration, and cost of renovations.
• Ensure contractors have their own liability insurance.

Specialised Insurance for Supported Living Properties

If your property is used for supported living, additional insurance considerations apply:

• Does the property house ex-offenders or individuals with substance misuse issues?
• Are carers visiting or residing on-site?
• Is the property used for rehabilitation or treatment services?

Such properties typically require tailored insurance to cover higher risks and specific tenant needs.

Common Pitfalls to Avoid

1. Underinsuring Your Property: Skimping on rebuild value or contents cover can lead to significant financial losses.

REMEMBER! THE VALUE OF THE HOUSE AND THE REBUILD COST HAVE NO CORRELATION!! A HOUSE MAY BE VALUED AT ￡80,000 AND IT MAY COST ￡160,000 TO REBUILD!! GET THIS RIGHT - ASK YOUR BROKER FOR GUIDANCE!!

IF YOU ARE UNDERINSURED BY 50% YOUR PAYOUT WILL BE ONLY 50%!! SPEAK TO A BROKER AND UNDERSTAND THIS CONCEPT!

1. Ignoring Small Print: Check for exclusions in your policy, such as unoccupied property clauses or limits on certain types of damage.
2. Delaying Insurance: Arrange coverage from the day you exchange contracts to avoid gaps in protection.

What Insurers Will Ask for in Your Policy Proposal

Before securing a policy, you’ll need to provide detailed information to your insurer. Below is an example of a comprehensive property insurance proposal form:

1. Personal Information

• Name: (Full name as written on ID)
• Title: (Mrs/Miss/Ms/Mr)
• Date of Birth:
• Contact Number:
• Email Address:
• Correspondence Address for Policy:
• UK Bank Account: Do you hold one? (Yes/No)
• UK Passport: Do you hold one? (Yes/No)
• UK Citizen: Are you one? (Yes/No)
• Occupation:
• Policy Start Date: (Date cover is needed from)

2. Background Information

Insurers will also assess your history to determine eligibility and potential risks. Be prepared to answer the following:

• Have any of the following ever occurred for you, a partner, or a business director in a personal or business capacity?
• Convictions or criminal offences (not spent) or prosecutions pending?
• Bankruptcy or insolvency proceedings?
• Previously dissolved or liquidated companies?County Court Judgments (CCJs)?
• Insurance proposals or policies refused, declined, cancelled, or subjected to special terms
• Any incidents, claims, or losses in the last five years?

For claims, insurers will need:

• Location and circumstances of any previous claims.

3. Property Information

• Property Address:
• Property Type: (House/Flats)
• Number of Storeys/Floors:
• Floor Construction: (Wooden/Concrete)
• Year Built: (Approximate)
• Purchase Date:
• Rebuild Value: (Including demolition, site clearance, labour, and materials)
• Contents Cover Required: (Yes/No)If Yes, Contents Value:
• Rental Income:

4. Property Condition

• Flooding History: Is there any history of flooding in the area?
• Subsidence: Are there any visible signs of damage from subsidence (including any surrounding properties)?
• Standard Construction: Is the property constructed with brick walls and a pitched tiled roof?
• Flat Roof:If so, what percentage of the roof is flat?What is the flat roof construction (e.g., felt on timber, concrete)?

5. Heating and Electrical Systems

• Heating System: How is the property heated?
• Electrical Safety: Is there a current electrical inspection certificate?

6. Tenant Type and Occupancy

• Occupancy:Is the property currently occupied by a tenant? (Yes/No)If unoccupied, how long has it been unoccupied?
• Let Type:Is it let on a single AST or as a shared house?If shared, how many bedrooms and tenants?Is it an HMO (House in Multiple Occupation)?
• Tenant Type: Who will reside in the property? (e.g., working professionals, students, DSS, asylum seekers, etc.)
• Support Needs: Are tenants at risk of substance misuse, mental health issues, or domestic abuse?
• Carer Involvement:Are there carers or support workers visiting or residing at the property?If so, how often?

7. Supported Living and Care (If Applicable)

• Supported Living Provider: Name of provider.
• Tenant Type: Details of tenants (e.g., ex-offenders, substance misuse).
• Under 18s: Are there any underage occupants?
• Medication: Is any medication administered on-site?
• Cooking Facilities in Rooms: If the property is an HMO, are there cooking facilities in tenant rooms?

8. Renovation and Works (If Applicable)

• Planned Works: Will there be any works, renovation, or redecorating?
• Structural Works: Will there be structural changes?
• Details:What works will take place? Estimated duration and cost of works?

Why This Information Matters

Insurers use this information to assess the risks associated with your property and determine your premium. Providing accurate and detailed answers ensures you’re fully covered and avoids disputes if you need to make a claim.

Final Thoughts: Why Insurance is Your Safety Net

Property insurance isn’t just another expense—it’s a necessary investment to protect your assets and financial future. Without it, you risk losing everything you’ve worked hard for.

By understanding what’s required and providing complete, honest information, you can secure the right policy tailored to your needs.

So there we have it - another article done and this one all about insurance and safeguarding your investment. If you’re unsure about the process, work with a broker who specialises in landlord insurance to ensure you have all bases covered.

Armed with a comprehensive list of information that you are likely to need, you will be prepared to provide any information your insurer requires.

And remember, at Brahma Property, a big part of our comprehensive training programme is sharing with you our trusted suppliers like insurance brokers. Get in touch on 0121 647 7090 or email us on [email protected] to kick start your training!