If you have properties, you have insurance, but what does it all mean?

Share this article...

As a landlord you could have one property, you could have many. Regardless of the number or type of property, you have insurance. And, hopefully you have at least attempted to read the ‘small print’ of your policies terms and conditions. But even if you have read it, do you understand what it means or were you thoroughly confused and just checking for anything alarming? Here are some key terms you will have probably read and what they mean;

Term

What does it mean?

All risks

This term is used to describe a policy which will cover any sudden or unforeseen loss of or damage to property. That is, unless it’s specifically excluded in the policy wording.

Average

An average clause means that if your property is underinsured, the insurer will only pay a claim up to the % of the sum insured. For example, if due to an incident a property has to be rebuilt and the cost of this is £100,000, but the property is only insured at £50,000 (50% insured), claim payments will be reduced by 50%. So in this case the insured would only receive £25,000, a significant shortfall. Even if the claim was less than the sum insured, say £40,000 to complete repairs, because the property would be assessed and found to be underinsured, any claim payments would still be reduced by 50% leaving you severely out of pocket.

IPT

This stands for Insurance Premium Tax. It’s set and decided by the government. There’s nothing we can do about it!

Loss of rent

If your property suffers damage and the tenant has to leave the property, your policy will pay the rent you would have received.

Peril

A peril is something that could happen that could result in a claim. Perils include; fire, flood, storm damage and malicious damage. Check your policies to see what perils are or aren’t covered.

Property owners liability (POL)

This protects you from claims made against you in respect of your legal liability for personal injury or property damage. An example being if someone tripped over an uneven paving slab on your pathway. Any injury incurred means they could make a claim against you for being negligent.

Subrogation

This is when your insurer pays a claim which could be recovered from the third party who was at fault. In these cases, your insurer will seek to recover the amount claimed from the third party’s insurer.

Subsidence

Subsidence is when the ground beneath a building moves. It can cause cracks to the brick work and compromise the buildings foundations. Insurers will want to know if the property has a history of subsidence. Or, if it is currently an issue. If it is, insurers could exclude it from the perils in your policy cover.

Warranty

These are very strict conditions in a policy imposed by an insurer. It could be something minor like requiring a certain standard of alarm or fire system. Not meeting these warranties could result in your insurer denying payment for a claim.

Wear and tear

When making a claim, if an item is covered as ‘wear and tear’ it means the claims payment will be reduced. It takes into account the value of the item at the time of the claim, not its original value. For example, carpets that are a few years old, damaged and need to be replaced through a claim, will not be replaced as ‘new for old’. But instead up to the value the carpets had at the time of the incident. If you want your policy to provide cover to replace items damaged with new pieces, make sure they are protected with a ‘new for old’ clause in your policy.

Contact your broker if you have questions about your policy. They can explain what it does or doesn’t cover to make sure your properties are adequately protected. After all, the worst time to find out you are lacking in cover is when you need to make a claim.

Did you like this blog? Sign up to our newsletter for regular updates.

Print Friendly, PDF & Email
Share this article...

About the author

A CIM qualified, results driven marketer. Stacey has a focus on delivering a wide range of marketing solutions to exceed client expectations.