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cjb
12-04-2008, 14:15 PM
Hi there,
I let out a flat that's in a block of 7... the building and hence the flat is covered under the block insurance, but I want to take out extra insurance to cover my loss of rental income should there be a fire or a flood etc that renders it uninhabitable for any period of time.

The only policies I've been able to find so far seem to be Buildings Insurance including rental protection - I've already got buildings insurance under the block policy.

Can anyone point me in the right direction?

Cheers.

tenant29
12-04-2008, 17:11 PM
Does the block of flats insurance policy include "alternative accommodation for 24 or 36 months" ? This item of cover should give what you are seeking ?


What is the annual premium of your block policy and the building insured cover ?

tenant29
12-04-2008, 17:18 PM
Rental guarantee cover alone ( without buildings insurance cover ) for loss of rent from tenant is offered by Maras ( www.maras.co.uk) from 26 pds per 6 months policy.

cjb
12-04-2008, 19:09 PM
Thanks Tenant29.

I don't actually know what the details of the buildings insurance are - I'm going to find out... If it does include alternative cover, does that usually extend to tenants?

paulb67
12-04-2008, 21:29 PM
First the bad news, it will be very difficult to buy Loss of Rent (following damage) insurance in isolation, if not impossible. Your welcome to try the usual specialists, but they will need a copy of the buildings insurance. You might be able to insure the rent separately but you CANNOT insure the rent unless the building is insured somewhere, albeit on a different policy. It's called the "material damage proviso" as I know a lot of insurance brokers like to read this forum and might be unsure.

The good news is that the existing block policy will probably include this cover but there are somethings to look out for.

1. Get a copy of the policy and check that it does have alternative accommodation/loss of rent cover. It's unlikely that it won't but you never know. Obviously in your case its loss of rent that's important.
2. Most policies that provide this cover automatically include cover for a given percentage of the building sum insured, say 20%. Probably plenty in most cases and as you only have one flat in your case too. However if the flat is in Chelsea, London and all the other flats are let out by the other owners it might be worth doing the maths.
3. Most blocks of flats policies don't specify an indemnity period. This is a good thing but again watch for the adequacy of 20% of the building sum insured issue. It might take 24 months or more before everything is back to normal.
4. If a sum insured and/or indemnity period is specified then check that it meets with your requirements. This situation would be common for flats that are part of a commercial premises. For example a parade of shops with flats above. (It may also be an indication that you have the wrong type of policy if there only flats in your building).
5. If there is a sum insured/indemnity period stated, check that the loss of rent is insured under the Business Interruption (BI) section of the policy and not the Material Damage (MD) section. Costs very slightly more to insure this way as a wider cover. BI gives you loss of rent until property reoccupied. MD only gives rent until property made rehabitable. Regardless of the basis of cover, rent will only be paid to you for as long as the stated indemnity period.
6. If you have any doubts about the policy coverage, write to the insurers and request that they insure you for what you need. If you have a Block of Flats type of policy, the cover should already be in the policy and you shouldn't have anything to pay. If it's a different type of policy you will probably need your name on the policy and the loss of rent sum insured for your flat specified, just to be on the safe side.

Overall you shouldn't experience any problems, but every policy is different so please take specialist advice.

As a small aside, the Rent Guarantee (sometimes called Rent Protection) insurance that has been referred to above, is for situations where the tenant doesn't pay the rent and not for property damage situations. Still a relevant cover but I don't think that this was the cover that you were querying.

tenant29
13-04-2008, 20:55 PM
cjb,

I suggest you write for a copy of the building insurance summary and you will get it within 30 days . Check the cover under the policy and it has a clause which says " the interests of the lessee's and their mortgage lender company are noted". This will allow you to claim directly under the insurance policy and you don't need to rely on the Landlord to make a claim for you.

Normally claims against the policy can only be made by the "insured party".

cjb
14-04-2008, 12:53 PM
Thank you Paul, that is very helpful indeed... I will write to the Managing Agents and get a copy of the Buildings Insurance policy and check it out.
If my loss of rent is not covered for whatever reason then I will see if I can get it added.

Thanks for your input too Tenant29.

cjb
22-05-2008, 07:43 AM
Just to give you guys an update - it's taken a while to sort out but thank you very much for your info, it was very helpful.

I contacted the managing agents and obtained a copy of the Buildings Insurance policy. It's a relatively new block of flats and the policy was originally set up by the Freeholder - loss of rent was specifically excluded from the cover so thank goodness you pointed me in the right direction.

There are 7 flats in total, only one of which is owner-occupied, so the vast majority of parties were in favour of extending the policy to cover loss of rent.

Anyway - to cover loss of rent for the building up to £89,000 per annum is an extra £52 per year - nothing at all in the great scheme of things, and cover for the residential premises commenced yesterday. However, having just read through these posts again there are two retail units at the front of the premises so I will check the policy wording carefully once I receive it to ensure that the right risks are covered.

So thank you very much for your advice, it was very helpful indeed.

leaseholdanswers
01-12-2010, 08:25 AM
cjb,

I suggest you write for a copy of the building insurance summary and you will get it within 30 days . Check the cover under the policy and it has a clause which says " the interests of the lessee's and their mortgage lender company are noted". This will allow you to claim directly under the insurance policy and you don't need to rely on the Landlord to make a claim for you.

Normally claims against the policy can only be made by the "insured party".

That's incorrect long leaseholders have a statutory right to make a claim with the insurer.

leaseholdanswers
01-12-2010, 08:30 AM
Just to give you guys an update - it's taken a while to sort out but thank you very much for your info, it was very helpful.

I contacted the managing agents and obtained a copy of the Buildings Insurance policy. It's a relatively new block of flats and the policy was originally set up by the Freeholder - loss of rent was specifically excluded from the cover so thank goodness you pointed me in the right direction.

There are 7 flats in total, only one of which is owner-occupied, so the vast majority of parties were in favour of extending the policy to cover loss of rent.

Anyway - to cover loss of rent for the building up to £89,000 per annum is an extra £52 per year - nothing at all in the great scheme of things, and cover for the residential premises commenced yesterday. However, having just read through these posts again there are two retail units at the front of the premises so I will check the policy wording carefully once I receive it to ensure that the right risks are covered.

So thank you very much for your advice, it was very helpful indeed.

Waht the otehr comments have omitted is:

Loss of rent if this is included it is important to include the rental level for the loss, and not just the loss of ground rent.

The only obligation to insure is based on the terms of the lease, and this may not require, either specifically or reasonably, to include this cover. In such cases other owners could claim that it is unreasonable.

In practice the additional premium is quite low and a creative landlord would introduce the cover at the renting lessess payment of the addtional premium.

paulb67
02-12-2010, 07:15 AM
Hi cjb

I think it would be prudent to ensure that the insurers are aware that the loss of rent cover you have requested doesn't include the commercial units. If you don't it shouldn't be a major issue for the insurer but it will avoid possible problems.

Most policies include ground rent as part of their rent definition but the sum insured does need to reflect this, especially in your case as you have been asked to specify a sum insured.

Many freeholders of small mixed commercial/residential properties that I see do insure or automatically have insured loss of rent cover for the residential portions. However many don't bother with the commercial loss of rent saying that this is the responsibility of the leaseholder who has invariably sub let to a commercial tenant. Whilst this is fine it does leave the potential for the ground rent, service charge element to be uninsured which would have an issue for the block as a whole.