PROPERTY OWNER / INVESTOR INSURANCE.
There are two common reasons why property investors buy Property Owners Insurance.
- It is required as part of the mortgage.
- To protect the financial investment that has been made in the asset (‘bricks and mortar’) should it be damaged by an incident such as storm or fire.
Using insurance to mitigate the risk of financial loss that results from the investment property suffering damage is a sensible measure, providing protection in circumstances that might otherwise prove disastrous to your business or personal finances.
There are a number of other financial risks to your investment and the income that it generates that can also be protected against by an appropriate Property Owners Insurance Policy.
Your Liability as a Property Owner
You have a legal liability for injury or damage caused as a result of your activity as a property owner – for example a slate falling from a roof and injuring somebody. Without this cover any compensation will need to be met by your business or your personal assets dependent on the legal structure in which you hold your investment. The calculation of personal injury awards changed May 2017 resulting in awards in the worst circumstances increasing considerably. (for more information see Qualitas Quick Note – Personal Injury)
Loss of Rental Income Following Damage to your Property
As well as the cost of repair that you may suffer following an incident you may also suffer a loss of rent if the damage results in the property becoming uninhabitable. Without loss of rent cover you are exposed to the continuing costs associated with the property, such as a mortgage, whilst being unable to generate rental income. Loss of Rent cover will replace the lost rental income for the period you select or until the income recommences (whichever is the sooner).
Malicious Damage Caused by Tenants
A risk of Property Investment is the possibility that tenants may cause intentional damage to the premises. This cover will not only protect you against the cost of repair or replacement, it will also enable you to claim for any resultant loss of rent (if Loss of Rent cover is also selected).
Loss or Damage to Landlords Contents
In the same way as you can insure the building you are able to insure against loss or damage to the contents that you have supplied. Importantly by selecting this cover you are also protected against any loss or damage for which you are liable that results from that contents.
Your Liability as an Employer
If you employ someone you have a legal duty to insure against the cost of compensation should they be injured or become ill as a result of their employment. (for more information about the legal requirement and who counts as an employee see Property Brief – Employers Liability)
The Cost of Providing Alternative Accommodation
If your property becomes temporarily uninhabitable (for example as a result of damage to sanitary equipment) alternative accommodation cover reimburses you with the cost of providing your tenant with alternative accommodation whilst the damage is repaired, ensuring that you can retain your tenant and rental income.
You can download this Property Note in PDF format here.