By The disruption caused by the COVID-19 pandemic on businesses has been nothing short of phenomenal and never been seen before.
We spoke with Steve Cox, specialist in Property Owners Insurance at Alan Boswell Insurance Brokers, on the impact of COVID-19 on Landlord & Property Owners Insurance to consider the ramifications to the sector.
Buildings & Liability Insurance
“Standard Landlords Buildings Insurance is absolutely unaffected by the virus. So, this is one area where things need to stay as they are. Rebuild values remain the same and, as such, so will your premium and claims process.
“Property Owners Liability insurance also remains unaffected and provides cover for costs and damages awarded to a member of the public if they suffer an injury following an accident on, or linked to, your premises. The risks remain, so cover should remain in place to protect you.”
Unoccupancy insurance
“Standard landlord’s insurance will include some form of unoccupancy cover, and this period differs depending on the insurance company involved. It is designed to maintain your protection during any periods of unoccupancy, such as between lets, when risks tend to increase. They increase because there isn’t someone inhabiting the building day-to-day and therefore could expose the property to higher risk of squatters, vandalism or damage caused by escape of water.
“But the pandemic is seeing an increase in unoccupancy and an increase in the amount of time a building is left vacant.
“Some insurers have relaxed the criteria and increased the unoccupancy period up to 90 days, but others haven’t. It’s really important, therefore, that you check with your insurers or brokers the details of your policy and consider purchasing a standalone unoccupied policy to give you the extended cover.
“Either way, if you do have an empty property it is crucially important that you inspect it regularly. Insurers insist on this and while, again, some have relaxed the criteria it makes sense to complete regular checks.”
Tenant defaults
“The Government have made it clear that no tenant can be evicted within the three month period stated on 18th March. Similarly to the extension to the furlough scheme there is a chance this could be extended. While it may be troubling for landlords to have tenant defaults these are unprecedented times and the only solution is to be prepared for it.
“Clearly tenants should be applying for benefits if they have lost their job and a good landlord will be armed with the appropriate information to pass on to their tenants. But if, for any reason a tenant is just trying to use the pandemic to avoid paying it would be sensible to add some level of additional support and consider Legal Expenses insurance to help with any legal costs accrued as a result of action needing to be taken.”
Due diligence
“While it may seem obvious to say that you should have your house in order when it comes to due diligence, now is the time to recheck and be absolutely sure you have everything in place.
“Ensure that tenant referencing is undertaken and guarantors are in place for all your tenants. Make sure you have the appropriate license if you have an HMO [House of multiple occupancy] and evaluate whether you’re best placed to have one tenancy agreement in place or individual agreements in any form of house-share.
“Finally, consider Property Emergency insurance. Everyone is working from home and so there has been a huge increase in the demand on electrics, plumbing and drainage. Now is not the time for a big bill to fix a faulty boiler.”
Getting advice
If you feel you may benefit from some extra advice on any aspect of landlord’s insurance please call Alan Boswell’s landlords team on 01603 216399 or email landlordenquiries@alanboswell.com
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