"We urge landlords to ensure their lease agreements are as clear as possible, particularly regarding issues like damages, modifications, and extended absences from the property"
- Greg Wilson - Quotezone
Landlord insurance experts from Quotezone.co.uk have highlighted five common mistakes that could void landlord insurance policies.
While buy-to-let properties have long been a popular investment choice in the UK, 31% of landlords have indicated plans to reduce the size of their property portfolios.
There are many challenges currently facing UK landlords, amongst the pressures are the government's rental reforms and additional costs landlords might face, like the expected energy efficiency upgrades. Hand in hand with mortgage rate increases and new tax implications, it's now more important than ever that landlords find savings where they can and protect their assets.
Being a landlord comes with numerous responsibilities and hidden expenses, making it essential to prioritise the protection of both property and investment to avoid costly financial pitfalls.
Unknowingly invalidating insurance could lead to significant financial problems for landlords. If the worst were to happen, they could find themselves vulnerable and unable to make a claim.
Tenants may inadvertently jeopardise insurance coverage by failing to notify landlords about major modifications, damages, or leaving the property unoccupied.
However, the experts are also warning that landlords who fail to act on reported damages could face a void claim.
A Quotezone survey revealed that 45% of tenants had experienced issues like mould or asbestos in a property, but as many as 16% of these cases went unresolved by the landlord.
5 ways landlord insurance may be invalidated
1. Unauthorised modifications
Tenants who choose to personalise their rental home through significant modifications could actually affect the safety and value of the property, meaning it could impact the landlord's insurance policy. It is important to clearly state in the lease agreement that any modifications be agreed in writing between the landlord and the tenant, and that significant changes will be unacceptable.
2. Leaving the property unoccupied
If tenants leave the property unoccupied for an extended period, it could affect the insurance if a claim is needed. This is because an empty property increases the risk of issues like burglary and water damage. To manage this risk, consider including a clause in the tenancy agreement requiring tenants to inform landlords if they will be leaving the property for a specified number of days.
3. Infestations
Damages caused by infestations are typically excluded from standard landlord insurance policies. This is because landlords are responsible for maintaining the property and neglecting regular care and maintenance can lead to infestation problems, often due to unsanitary or structural issues. Regular inspections can help prevent this, and it’s also advisable to ask tenants to report any signs of infestation, so landlords can address the issue promptly.
4. Rent to rent
A ‘rent to rent’ agreement involves a person renting a property from a landlord and then subletting it to other tenants. This arrangement can pose a significant risk to insurance, as many policies require a direct relationship between the landlord and the tenant. It’s essential to carefully review the details of the policy or speak directly with the provider to ensure proper coverage in this situation.
5. Failing to act
While it is important tenants are transparent in reporting issues and concerns with their landlords, it is also important landlords respond in a timely and professional manner. Avoiding issues raised by tenants could leave them with unsafe conditions in which they are forced to try and fix problems on their own. This could mean the insurance policy is invalidated and any claim from that point could be rejected.
“There are steps landlords can take to help ensure they maintain their insurance policy, but many may not realise that their tenants also play a key role in keeping these policies valid," explained Greg Wilson, CEO and insurance expert at Quotezone, “We urge landlords to ensure their lease agreements are as clear as possible, particularly regarding issues like damages, modifications, and extended absences from the property. Transparency between landlord and tenant is one of the best ways to safeguard the insurance policy.
“It’s crucial to understand the risks and know exactly what could invalidate the insurance policy. Keeping providers informed about any changes to the property is essential to help ensure it's covered if something goes wrong.
He added, “If landlords need to make an insurance claim for an issue that was reported by a tenant, but they chose to ignore it, they’ll likely end up covering the cost themselves, as insurers could deny the claim.
“That’s why landlords need to act quickly, protect their property and ensure the conditions remain safe for tenants at all times."
