Building insurance is usually not one of the first things you think about a property when you’re a tenant, landlord or investor. But it is certainly one of the most important.
Building insurance mistakes can cost you a lot of money – not to mention inconvenience and distress.
1. Don’t leave your property unattended
With most insurance policies there is a limit for how long a property can be unoccupied before you lose your insurance cover.
If you are going to be away from your property, take the following steps:
- Find out from your insurer how long you can leave your property unoccupied before you lose your cover and what steps you must take to keep your policy in force
- Arrange for a family member or friend to visit the property on a regular basis to pick up mail and check that everything is okay
- If you are going away during the winter months take steps to minimise burst pipes.
If your property is an apartment, you should also inform your freeholder or managing agent.
2. Careful what you say
You should avoid any temptation to be economic with the truth when applying for insurance. Insurance contracts are said to be “contracts of the utmost good faith”. You have a duty to:
- Act honestly
- Not mislead
- Not withhold critical information.
If you breach the duty of utmost good faith, the insurer is entitled to avoid your policy from its commencement, leaving you without any cover and unable to make any claim.
3. Apartments are different
If you own a house, you are normally responsible for the building insurance.
If, however, you own a flat, the freeholder or the management company will typically insure the building relying on the right to do so in your lease.
You will pay the premium as part of your service charge payment.
It is good practice to check every year that your apartment is actually being insured. Ask for:
- An up-to-date schedule of the cover
- A copy of the policy
- Proof of payment of the premium.
SOMETIMES A FREEHOLDER IS MISSING AND CANNOT BE TRACED.
In that case, you should seek legal advice as to your best course of action.
One option is to get together with the other leaseholders in the building to arrange a single policy.
A less efficient and more problematic course is for each individual leaseholder to take out their own policy or ask their mortgage company to insure on their behalf.
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4. Don’t forget the contents
It may be blindingly obvious to some, but it is not to others…building insurance is not contents insurance. As well as the building, which normally includes its “fixtures and fittings”, you need to insure its contents
Watch out for the “single item limit” of your policy. If the limit is say £2,500, the insurer will pay out a maximum of £2,500 for any one item.
If you have valuables such as heirloom, jewellery or watches exceeding the single item limit, you should ensure that you take out additional cover.
DO NOT GUESS THE VALUE OF YOUR VALUABLES. OBTAIN PROFESSIONAL VALUATIONS WHEN IN DOUBT.
5. Shop around for the best quotes
If you are on a drive to save money, your building insurance premium is one of the best places to start.
Insurers rely on our inertia and invariably pump up the premium to existing customers every year – irrespective of market conditions.
Use price comparison websites to ferret out the best deals.
If you have been insuring with the same insurer for many years, changing to a new provider could result in a chunky cut in your premium.
Have you had good or bad experiences with building insurance? Do you wish to share? Other readers may be able to learn from your story. Please leave your comments below.
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