We always try to make buying our landlord property insurance as simply and straightforward as possible. But occasionally it's easy to get confused with the myriad of insurance technical terms.
In this section we've compiled a list which we hope will help to clarify some of the most frequently used terms.
Association of British Insurers. This organisation represents the interests of the UK's insurance industry.
Letting or Managing Agent. These companies will act on your behalf. Their tasks can include sourcing tenants, undertaking the necessary tenant reference checks, checking the property on regular basis, dealing with property maintenance issue, collecting rents. Some or all of these tasks can be undertaken by the landlord and it is down to the individual landlord as to the extent of the agent's involvement.
Assured Shorthold Tenancies. A contract giving tenants the right to occupy a specific property for a fixed length of time in accordance with the terms and conditions of the agreement.
Many property policies include an 'average' clause. In the event of a claim where the property is deemed to be underinsured 'average' may be applied by the insurer and any resulting payment is then adjusted in proportion to the amount by which the property is undeinsured i.e. being underinsured by 10% would result in a 10% deduction from the amount from the claim.
British Insurance Brokers Association
Their members including brokers and independent intermediaries. They seek to maintain standards and behaviour and protect members' interests by providing guidance and support, promoting views on proposed legislation, training, forums for discussion, liaising with outside bodies.
Buildings Sum Insured. This figure should reflect the cost of rebuilding the property to its current design and standard in line with current building regulations and it is usually different to the market value. A recent survey or mortgage report should indicate the likely rebuild cost. Property owners can also use the House Rebuilding Cost Calculator on the Association of British Insurers website (http://calculator.bcis.co.uk/). The BSI should normally include fixtures and fittings, sanitary ware, underground services and external items/buildings that belong to the property including outhouses, garages, fuel tanks, walls, gates, fences etc. Check policy wordings to see exactly what is covered.
Contents Sums Insured. This figure should reflect the cost to replace all the items within your property including outhouses, garages and sheds. For example all furnishings, furniture, personal belongs, jewellery, white goods (unless integrated in the kitchen cupboards), clothing, cutlery, crockery, ornaments, towels etc.
This is the sum of money paid by the tenant prior to the start of the tenancy. This money must be deposited within 30 days of receipt and protected through one of the approved schemes. The purpose of obtaining a deposit is to ensure that money is available for any repairs for damage or rental payment failure at the end of the tenancy.
Two or more insurance policies cover the same insured item against the same risk.
Employer's Liability Insurance
Insurance cover for injury or disease sustained by employees as a result of their work.
Financial Services Compensation Scheme (FSCS)
May pay compensation to the customer for claims where the insurer is unable to pay, for example because it has gone into liquidation or ceased trading. Where the insurance is compulsory, for instance motor insurance then the claim is covered in full subject to policy terms. For non-compulsory insurance then 90% of the claim is covered, subject to policy terms.
Financial Ombudsman Service (FOS)
This independent organisation adjudicates over complaints that remain unresolved to the customers' satisfaction through the usual company complaints procedures. The service is available to policyholders as long as their insurer has joined the scheme. The decision of the Ombudsman is binding on the insurer however should the insured wish to appeal its decision to the courts they are at liberty to do so.
Financial Conduct Authority (FCA)
This is the governing body that regulates the financial services industry in the UK. Their powers include rule-making, investigations, imposing fines, suspension, limiting company activity and immediate changes to business practices when a firm acts unethically or ignores the regulations regarding consumer interests. Its main aims is to protect consumers, ensure the industry remains stable and help reduce financial crime. Financial service providers need to be authorised and regulated by the FCA in order to conduct financial business in the UK. http://www.fca.org.uk/
Fixtures and Fittings
Items that are fixed permanently to your building i.e. sanitary ware, kitchen cabinets, radiators etc.
Good State of Repair
The property is in good condition with no signs of damage, decay, deterioration, cracks, subsidence or wear and tear etc.
House in Multiple Occupation. The full definition of what constitutes a house in multiple occupation is complex and can be found on the www.gov.uk website under Houses in Multiple Occupation. Landlords of HMOs have to comply with additional regulation regarding safety etc.
Financial compensation that places the insured back in the same position prior to the loss.
Each year the sums insured will rise in line with inflation.
A detailed catalogue of the all items and their condition including furniture, furnishings, fixtures and fittings, property structure (walls, ceiling, floors, doors, cupboards, sanitary ware, fixed glass etc). It is usually documented prior to the start of tenancy and agreed by both parties and supported by digital photographs or film.
Insurance Premium Tax. A tax levied by the government and calculated as a percentage of the insurance premium. This figure should be shown as a separate amount on any insurance documentation. IPT is not applicable to those policyholders who reside on the Channel Islands or the Isle of Man.
Joint Tenancy Agreement
Multiple tenants living in a property who all acquire equal rights and responsibilities under a single tenancy agreement.
Independent persons/companies appointed by the insurer who process claims from start to finish. They will investigate, negotiate and make recommendations on settlement.
Independent persons/companies appointed by the insured to prepare & negotiate claims on behalf of the insured.
The amount paid for the insurance cover.
Professional Indemnity Insurance (PI)
Cover for loss, injury, damage suffered as a result of misleading professional advice.
Property Owners Liability
Your liability as the property owner should a third party suffer a bodily injury following an accident or illness whilst on your property. Property Owner's Liability insurance can provide cover for damages awarded to a third party plus any legal expenses, solicitor's fees, court costs and claimant expenses.
Insurance cover for claims against injuries, damages or illness sustained by the public.
These items include baths, showers, toilets (bowels and cistern), bidets and sinks.
The property will usually be built of brick, stone or concrete with a roof of slates or tiles.
A legal contract between a landlord and tenant which gives the tenant the right to occupy the property in line with the terms and conditions of the agreement and gives the landlord the right to receive the rent.
The building or contents insurance cover is below the actual cost to rebuild or replace the property and possessions at current prices.
Wind and Watertight
The building is secure with doors, glazed/boarded windows, completed walls, floors and roof.
These are usually large electrical items such as fridges, freezers, washing machines, tumble dryers, dishwashers etc.
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