The hugely popular LandlordZONE forum is a friendly community where landlords share their experiences, exchange tips and ask for advice. Here we answer a recent question and ask the experts at Hamilton Fraser to give their best answer.
A landlord’s insurance company has decided that their property’s flood risk has increased, despite it being in an area with a low probability of flooding. They want to know why their premium and excess on any flooding claim have gone up.
Steve Barnes (pictured), Associate Director at LandlordZONE insurance partner, Hamilton Fraser Total Landlord Insurance, offers an explanation.
“Although it’s not possible to comment on this particular case without knowing the specific details of the property, there are a number of reasons why this landlord’s premium and excess may have increased, despite no apparent change in flood risk,” he says.
“Insurance companies rely on a range of data to inform their long-term risk management, including climate change analytics to assess future flood risk, and flood mapping.
“Lots of insurers will be working off the same data and therefore it’s likely that they will make comparable decisions when it comes to assessing the flood risk of a property. However, with forward planning and a clear checklist of what you’re looking for, you should still be able to find protective, competitive cover that meets all your insurance needs as a landlord.
“Flooding has always been a substantial risk for certain parts of the UK, and it can happen anywhere, not just in riverside locations. For example, torrential rain, burst water mains and backed-up sewers can result in surface water that can flood properties and make them completely uninhabitable. But an influx of named storms in recent times has further impacted insurers’ risk appetite and ultimately the cover they are willing to provide.
“Last year saw 10 named storms, doubling the 2019 figure of five. At Hamilton Fraser Total Landlord Insurance, we experienced a 95 per cent increase in storm claims compared to the previous year. In one recent case, we paid out £143,755 for a claim where a major flood caused by Storm Desmond had caused extensive damage to a property.
“In 2020, storms Dennis and Ciara alone resulted in an estimated cost of over £500 million to insurers. This dramatic rise in claims is one of the primary reasons landlord insurance providers are increasing their premiums.
With extreme weather events increasing steadily over recent years, it’s vital for landlords to not only do as much as possible to prevent flooding in the first place, but to ensure they’re properly covered too.
“Hamilton Fraser Total Landlord Insurance is signed up to the Flood Re scheme, which will cover buy to let properties as long as they meet the criteria outlined here. The scheme raises funds to cover flood risks in insurance policies and reimburses the insurer after a paid claim is made, helping to keep premiums down.
“Another reason why this landlord’s premium and excess have increased could be to do with the fact that the insurance market is currently hardening. After several years of a ‘soft’ market with competitive premiums, relaxed criteria and wider cover, premiums and excesses are now going up. In a hardening market, it’s particularly important to make sure you’re fully protected.
“In our recent article, Six risks in a hardening market and how to avoid them, we provide a more detailed explanation of what landlords can do to avoid hefty pay-outs in a hardening market.
“For example, you can sometimes reduce your premiums by increasing your excess, without affecting your level of cover – an option which might make sense if you rarely make a claim. Or, if the excess is already very high, as in this case, you might be able to shop around for a more competitive provider.
“However, while a soft market offers landlords a wide range of choice, in a hardening market, insurance options are fewer as some insurers mitigate their risks by pulling out of the market altogether, leaving fewer quote options.
“It’s important to emphasise that, in the current climate of a hardening market, landlords should be careful not to leave insurance renewals to the last minute, as you may find your provider is no longer offering a policy which is good value for money and suits your needs.”
You can listen to Steve Barnes discussing the causes of the current hardening insurance market, what landlords can do to mitigate any problems with their portfolio and how to get the best value for money, in the latest episode of Hamilton Fraser’s Property Podcast, ‘Caught between a rock and a hardening insurance market’.
To ensure you get insurance which adequately covers you for all eventualities, follow the Hamilton Fraser Total Landlord Insurance checklist, which you can find at the end of our article on the hardening insurance market.
As a valued LandlordZONE reader you’re entitled to 20% off Hamilton Fraser Total Landlord Insurance’s policies, call the team today on 0800 63 43 880 quoting code LZ2021 or get a quote online in under 4 minutes.
Hamilton Fraser supports landlords, letting agents and tenants by offering a range of solutions and thought leadership to help them navigate the private rented sector. Most recognised in the private rented sector for providing award winning landlord insurance, the Hamilton Fraser family includes Total Landlord Insurance, mydeposits, the Property Redress Scheme, Client Money Protect, Landlord Action, Ome, HF Assist and Total Landlord Mortgages.
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