The tax on any insurance policy rises from 10% to 12%, thanks to the Chancellor of the Exchequer’s decision in his autumn statement – and reported by the Guardian newspaper on the 23rd of November 2016.
Along with every other insurance customer, therefore, at a stroke landlords face a 2% hike in the cost of insuring their buy to let property and business. That increase means that you are more than ever likely to be careful about what you are spending on this essential safeguard – and how you might be able to save money:
Cover for your business
- just as no two buy to let businesses are the same, no two landlord insurance policies are the same either;
- typically, policies are made up of several different areas of cover, with some including certain risks as standard and others offering the protection as an optional extra;
- if you are looking to save money, make sure you arrange the cover that suits you and your particular let property and business;
- tailoring insurance to your particular needs and circumstances might prove more difficult than it first appears;
- there are so many different products on the market and failure to provide cover for some essential part of your business might prove costly, whilst paying for elements of cover you might not need is an unnecessary expense;
- to help negotiate this maze, you might want to consult a specialist landlord insurance broker to make sure that the cover you buy is tailored to your specific, individual needs as a landlord;
- probably the most important element of cover is for the protection of the structure and fabric of the property you let – protection against such major risks as fire, floods, impacts (from vehicles or falling objects), storm damage, vandalism and theft;
- since some of these may lead to a disaster that results in the total loss of the property, building insurance needs to be sufficient to cover the cost of reconstruction;
- it is important to be as accurate as possible in this estimate of rebuilding costs, since you want enough cover to make sure the property may be rebuilt, yet avoiding any inflated estimate that results in your paying over the odds for the insurance you arrange;
Fixtures and fittings
- part of your responsibility as a landlord is to let the property in a good condition and to make repairs as and when they become necessary;
- but some of those repairs may be needed because of damage caused by your tenants – a cracked or broken toilet bowl, for instance, is an essential repair and one that is likely to be relatively expensive to repair;
- you might want to check whether your insurance policy extends to such accidental damage caused by your tenants or whether you need to find some way of getting them to pay for the damage caused;
- however careful your selection of tenants, there is always a risk of one or more of them causing malicious damage to your property;
- some landlord insurance policies cover this risk up to amounts of £5,000, but others do not – you might want to consider whether cover is likely to represent money well spent.
Finally, if you are a landlord on a cheap policy but not insured correctly, a bespoke landlord insurance policy may cost more in the short term – but in the long term it may save money especially in the event of a claim
At a time when increased insurance taxes make landlord policies inevitably more expensive, it is more than ever important to take into consideration some of these tips on saving money on the cost of your insurance.