Insurance
There are various categories of insurance as follows:
Buildings Insurance
Buildings insurance is very important at it will pay out to rebuild
the property in the event of loss or damage. Some policies pay for
proportions of lost rent. Remember the loan or mortgage repayment demand
does not stop after a fire or some other such catastrophe. Consequently
Buy2LetExpert would certainly strongly recommend this type of insurance.
It may be that the insurance is actually a legal requirement anyway.
Many tenancy contracts and certainly the one used by Buy2LetExpert
stipulate that the landlord must have building insurance in place. The
last think any investor wants after fire or damage is a bill to re house
the tenants as well as a bill to rebuild and refurnish the property.
Cash flow is normally tight for buy to let investors and so the investor
simply could not afford these bills. Hence the insurance is a must.
Buy2LetExpert recommend using the internet to obtain several prices.
Shopping around easily can save 20%.
Contents Insurance
There are a variety of reasons (e.g PAT tests)
why furnishing and contents costs should be kept to a minimum. Buy2LetExpert might expect to furnish a
typical 2 bed property with £2000. It is almost impossible to obtain
contents insurance for articles in a house lived in by the non insured
tenant and any policies of this type are so stuffed with exclusions they
are not worth anything. Buy2LetExpert suggest contents insurance is
given a wide berth in the buy to let arena. Of course, this advice would
be very different for one’s own home.
Boiler Insurance
In recent years boilers have become more and more complex in part in
response to increased electronics seen as boilers become more efficient.
Most boilers will have an expensive printed circuit board (PCB), brand
specific timers, valves, ports and more. Furthermore, it is the one area
of maintenance that Buy2LetExpert do not touch other than for basic
faults. See more in our
maintenance
section but the best person
to fix a boiler is the boiler manufacturer. They carry the parts for
their boilers and so the chance of an immediate fix is high. Non
manufacturer repairers may be competent but cannot stock all the parts
of all the boilers in the van! So any repair becomes a two stage
operation. First the visit to establish the fault. Secondly the ordering of the part. Finally there must be a revisit to fit the new
part. The whole process can take a couple of weeks and cost the landlord
two site visit costs and not one!! Remember also this is a boiler and
the house is probably ice cold! Speed is of the essence otherwise
tenants will become very upset and may even start demanding rent
refunds! Most boiler manufacturers offer boiler insurance but
Buy2LetExpert would not tend to take the insurance 'up front' as bolier
issues are quite rare. If the boiler had a problematic
record we might suggest renewal but it would depend on the
circumstances.
Other Insurance
It is very unlikely Buy2LetExpert would recommend any other form of
insurance. Appliances (such as fridges and washing machines) tend to be
initially guaranteed for 2 years (assuming they have been properly
registered). After that period an insurance invitation will follow and
should go straight in the bin. Most appliances are quite reliable.
Washing machines have a shorter life but the insurance costs are far too
high anyway and are stuffed with exclusions. Furthermore appointments
tend to have very loose arrival time slots. A whole day can be lost
'house sitting'. The cost of this labour must be added to make the true
cost of the repair.
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