Risk management and risk reduction for landlords
Owning a property that you rent out comes with a variety of financial and legal risks, such as the risk of unexpected disasters like a fire or flood, or unanticipated legal disputes with tenants.
That’s why risk management for landlords is vital. If you are prepared for the unexpected, you can protect yourself from financial losses.
Let’s take a closer look at some tips on how you can reduce and manage your risks.
1. Keep up with the general maintenance of your property
According to Registered Gas Engineer, an official Gas Safe Register magazine, more than 20% of home/property owners said they have avoided regular home maintenance tasks, which has ended up costing more in the long term.
In fact, one of the top responses from those that were surveyed by Registered Gas Engineer said they avoided fixing a leaking toilet. This can be seen as a false economy when according to Checkatrade, fixing a leaking toilet can cost £40-£60 per hour to repair, versus an emergency call-out fee of £100-200.
The annual servicing and safety checking of gas appliances also ranked high on the list of maintenance tasks that were avoided. However, according to Registered Gas Engineer, the costs of leaving any issues unchecked could be over £400, whereas an average safety check and service costs around £100.
Other jobs that cost more to repair than maintain include clearing damp or mould, checking the roof for loose tiles, leaking taps, and annual boiler services to detect early signs of wear and tear.
These examples show that carrying out preventative maintenance, and being proactive rather than reactive can save you money in the long run and reduce your risk of significant financial loss.
2. Keep records
It is advised for landlords to keep hold of records, to serve as evidence in the event of a dispute with a tenant. Should the worst happen and a tenant makes a claim against you, any documentation can provide a paper trail to show firm dates, times, and details of actions you carried out.
Documents that should be kept include:
- Fire safety paperwork – This includes all paperwork relating to your smoke alarms along with carbon monoxide alarms.
- A property inventory – This is an in depth document that outlines the furniture, fixtures, fittings and appliances. Having a property inventory will help avoid any disputes at the end of a tenancy.
- Landlords Insurance policy documents – Landlords Insurance will cover you against unforeseen circumstances like fires or floods and if you have legal expenses cover, you will be covered for the cost of litigation.
- Repair works – This includes all paperwork relating to repairs carried out on the property.
- Tenant inspections – Keep a record of when you visit the property during the tenancy, and any issues raised.
3. Get the right insurance
Having the right insurance will provide you with the financial protection to safeguard your property investment. Whilst Landlords Insurance is not a compulsory insurance, it will protect you against the risks associated with your rental property and will typically include buildings and contents cover as standard.
Landlords Insurance can include a variety of policies such as:
- Buildings Insurance – This insurance will cover the cost of a rebuild or repair following a disaster, such as a flood or fire.
- Contents Insurance – This provides protection against the loss or damage of the contents owned by you, within your property. These could be items of furniture, appliances, or crockery etc.
- Property Owners Liability – If a tenant or visitor suffers a personal injury or damage relating to your property, they may file a compensation claim against you. Property owners liability insurance will protect you against the financial costs associated with such claims.
- Legal Expenses Cover – This insurance protection will cover the cost of any legal services, up to the limit of your policy.
Click the link to find out more about Landlords Insurance.
4. Beware of underinsurance
If your building is underinsured, the cost to repair or rebuild will not be entirely met by your insurance. This means you will need to meet the shortfall personally, or by other means. You should consider if you would you be able to meet these financial requirements.
Additionally, if you are found to be underinsured, your insurance company will apply a condition known as ‘average’ . This means that they will reduce the claim settlement amount proportionately to the amount of your underinsurance. If you have a large property or your underinsurance is significant, this could be a substantial amount and may result in your inability to rebuild or repair your building.
Click here to find out how you can avoid property underinsurance.
If you own a property and rent it out, our experienced advisers can help you take a look at the bigger picture and ensure that you have the right insurance cover in place for your specific needs.
We’re here to help
Our experienced brokers are here to talk through your landlords insurance needs and will offer tailored advice based on their discussions with you. We have partnered with some of the best-known UK insurers who offer comprehensive insurance policies for property owners, so you can be assured of a solution that will safeguard your investment.
Get in touch today to discuss your insurance requirements by calling 01480 272727 or send us an email at enquiries@barnesinsurancebroker.co.uk
