With competitively priced property on the market, a stamp duty holiday in place until the end of March 2021, and unsatisfied demand for private rented accommodation, more landlords are looking to expand their property portfolio Property Reporter recently.
Since these are the landlords most likely to be interested in landlord portfolio insurance, here are some of the most frequently asked questions (FAQs) on the subject.
What is landlord portfolio insurance?
Just as the term suggests, the insurance is specially designed for landlords who own not just a single buy to let property but a whole portfolio of them.
How many properties are in a portfolio?
In an article on the 11th of October 2020, the Property Geek insisted that a “portfolio landlord” is a landlord who owned a minimum of four buy to let properties on which there was a mortgage.
The subject of that article, however, was a change in the rules applied by the Bank of England’s Prudential Regulation Authority (PRA) on mortgages for property added to a buy to let portfolio.
The definition requiring a portfolio landlord to own a minimum of four mortgaged properties is not typically applied by providers of landlord portfolio insurance. For the purposes of insurance, any number greater than one is likely to be considered a portfolio.
Do I have to buy landlord portfolio insurance?
However many buy to let properties you own – and whether any of them are mortgaged or not – you might choose to insure each property separately. The buildings, contents (if required) and your liabilities as a landlord are then covered under each of the respective insurance policies.
So, why would I choose landlord portfolio insurance?
There are two main reasons why you might want to opt for landlord portfolio insurance instead of insuring each property separately:
- it’s typically cheaper; and
- it’s more convenient.
Buying more than one of similar items invariably attracts a discount – and landlord portfolio insurance is no exception. Insurers welcome your custom and if you are buying cover for more than one property, you are almost certain to pay less for each policy on a policy by policy basis.
If you are insuring each of your buy to let properties separately, you are likely to have different renewal dates spread out throughout the entire year – and run the risk of forgetting or overlooking the need to renew and instead leaving your business vulnerable to loss or damage. Portfolio insurance brings all those individual covers under a single policy – and, with it, a single renewal date. Not only is that single renewal date likely to be more convenient, but it also avoids your leaving any one of your portfolio of properties without the cover it needs.
What types of buy to let property are suitable for inclusion in my landlord portfolio insurance policy?
You might choose to include any number of different types of let property within the same landlord portfolio insurance policy. That includes property such as:
- residential buy to let;
- Houses in Multiple Occupation (HMOs);
- mixed-use residential and commercial let property; or
- commercial let property.
What does landlord portfolio insurance cover?
Although portfolio insurance brings together all the insurance you need for all your let property under a single umbrella, the nature and extent of the cover provided is the same as if you had insured each one separately.
Although there may be differences in the detail of the cover offered by various portfolio insurance policies, they typically provide cover under the following broad headings:
- at the core of practically any property insurance, this element of cover protects the structure and fabric of the building itself against such potentially serious risks as flooding, fire, lightning strikes, storm damage, escape of water, impacts, vandalism, and theft;
Contents insurance (if required)
- cover against loss or damage of the contents you own – furnishings in residential accommodation, for example, or machinery in commercial buildings – while your tenants are responsible for arranging cover for their own belongings;
Compensation for loss of rental income
- any one of your properties is at risk of serious loss or damage arising from an insured event and may leave the building temporarily uninhabitable or unusable pending repairs and reinstatement – so, landlord portfolio insurance typically includes provision for some degree of compensation for loss of rental income;
Landlord liability insurance
- if a tenant, one of their visitors, a neighbour, or a member of the public is injured or has their property damaged through some connection with your property, as the landlord and owner you may be held liable and ordered to pay potentially substantial compensation – landlord liability insurance offers indemnity against such claims.
Your portfolio insurance, in other words, is capable of providing the same degree of protection as insuring each of your properties separately.