Property Insurance
General property insurance concerns any property owner, whether they own a home or business building. It prevents financial loss due to the damage caused to the structure or contents by ensuring that the insurance company will reimburse or repair the property and the belongings inside it.
Moreover, the owner will not suffer cost-wise as they do not have to pay for the reparation out of their pocket and only pay the premium. Damage caused can be anything from natural disasters to theft and manufacturing defects. Still, different insurance companies have varying plans with various coverage, and it is essential to pick a package tailored to your business. There can be many different policies included in property insurance, as well as different valuation methods.
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
Property Insurance Policies
As property insurance is a broad term, it can be not easy to include every cover possible. Each property is specific to its use, location and owner and therefore, a range of policies were created to add which would benefit you the most. Furthermore, the more comprehensive the cover on a policy, the more expensive it is. Smaller businesses or properties not prone to as much damage or theft can save policyholders money by not picking these covers and hence can pay a lower premium that is much more suited to them. Following is a list of the most popular property insurance covers:
Commercial property insurance is the most important type of property insurance for business owners. It is specifically designed to cover the exterior of the building and the contents inside it from natural events like fires and lighting and artificial events like theft, vandalism and pipe explosions. In such occurrences, a claim must be filed to the insurance company detailing what has happened and when and be filed by the specific period set in your contract. The team can evaluate the claim and reward you with monetary compensation. The belongings inside the property, like the furniture, appliances, devices and inventory, and the actual property itself, can then be replaced or repaired.
Earthquake insurance is heavily encouraged when a property is located in a disaster-prone area. Specifically, in the UK, this concerns northern England and Wales, where earthquakes of magnitude six have been recorded. Should a severe earthquake occur, the property and its content will be repaired, as well as a temporary building to run the business and ensure things operate as typically as possible until the original property has been fixed?
While most businesses may not necessarily benefit from this cover, it is vital to think about the extent of the damage that can be potentially devastating. Without this type of insurance, the costs of rebuilding a property from scratch and replacing all of the equipment inside it can be detrimental to a company and enough to devastate it, threatening the business’s future financially.
Flood insurance covers losses sustained to a property due to water damage caused by an overflow of water onto dry land. For buildings near the sea, rivers or lakes, it is of utmost importance to protect from the damages caused like cracks in the foundation, destruction to telephone lines, and even damaging appliances; water can also accumulate in the gaps and cause gradual severe long-term disruption. Floor insurance will, in turn, pay for the repair of any structures affected, the drying of the property and, if necessary, the removal of remains. The quote for this insurance is higher if you live closer to water and could be over £100 higher than if you were not close to it.
Fire insurance covers damage sustained to the property directly due to a fire. Not only does this include natural disasters like fire and lighting, but additionally artificial reasons like faulty wiring, water tank malfunctions, and accidental electrical appliance destructions. For example, if there was lightning in the neighbourhood that consequently led to a fire that damaged the roof of your building, the insurer will evaluate the claim and pay for the repair of the structures of the building. In the last year alone, there has been a 40% increase in fire insurance claims and over £1.3 billion paid out to policyholders, proving that obtaining this insurance is an asset that otherwise could lead to business failure without it.
Property Insurance Valuations Methods
Once you apply for property insurance and acquire it, you must pay a monthly premium based on the severity level of the plan you have picked and the level of risk your property poses. Should disaster strike and you have to file a claim, the money that the insurance company pays out can be decided in one of two ways.
Replacement cost coverage ensures the property based on its replacement cost without detracting the depreciation costs, which are the costs associated with the loss of value of a structure or equipment over the years. Essentially, the money provided is equal to what it would cost to reconstruct the building or replace its contents. This type of coverage is more costly because the payout is higher but worthwhile.
Conversely, actual cash value coverage is the payout that consists of the costs of repairment minus the depreciation costs. It is lower than replacement cost coverage because it considers the property’s value at that moment, fundamentally meaning that older and more used items would be worthless. Thus, the insurance company would pay less money. The payout is equal to what the property and its contents are worth currently instead of how much it would cost to replace the brand new.
What Does Rental Property Insurance Cover?
Rental property insurance protects against significant risk. The paragraph below explores situations a landlord insurance covers:
- Personal Property
Rental Property Insurance safeguards the house owner’s property. Some landlords have listings of flats to rent in Leicester on rental platforms they might want to protect. On platforms such as Rentola, there are usually prices and descriptions of properties to rent, including flats listed. For example, in Leicester, the average price of a 3 bedroom flat for rent is £747 while 5+ bedroom flats are about £596. Landlords looking to secure their rental properties can opt for rental property insurance to mitigate potential risks and safeguard their valuable assets.
2. Liability Coverage
This financially protects a landlord if they are deemed legally responsible for the medical expenses or property damage of a tenant or individual associated with the rental property. In addition, it will pay for their legal defense expenses, up to the limits of their liability coverage, if they are sued. Several factors may affect the average cost. Liability coverage may cost about £100 to £1000. These are estimates, and the actual cost may vary based on the situation.
3. Umbrella Policy
A wealthy property owner can benefit from purchasing an umbrella policy. Just like small business insurance is vital, rental property insurance is. It provides additional coverage to protect them against liability for sums exceeding the policy’s limits. For instance, if a property is insured for £100,000 and damages of £150,000 occur, the umbrella policy covers the extra £50,000.
What Isn’t Covered by Rental Property Insurance?
The following are some things that a landlord policy might not cover:
- Shared Property: This involves renting out a spare bedroom or an entire home floor. A rental property insurance policy usually will not cover home sharing. If the owner does not live in the property, rental property insurance is designed to protect the property. Tenants who would rather not share a flat or apartment can get their hands on home listings on Rentola. On rental platforms, they can find images or videos of homes from private landlords.
- Mechanical Malfunctions and Repairs: There is a good chance that one will be required to pay for the required repairs or replacements in the property. This may be out of the landlord’s pocket if a piece of equipment in the property breaks down. Hence, landlords need to get separate coverage for issues like this.
- Tenants’ belongings: Under most circumstances, the landlord’s insurance policy does not cover the tenant’s belongings. Hence, renters must strive to secure houses with building insurance policy or plan to have a sort of coverage. These kinds of housing are accessible on Rentola, which has listings of properties from private landlords with no agency commissions. To obtain a level of protection, it is also vital for tenants to have renters insurance coverage.
Other Forms of Protection
Rental property insurance may also include additional coverages. They can be bought with the policy or separately. Some examples are:
- Codes and Ordinances: This extra coverage will assist in paying for the costs connected with repairing or upgrading a property if the building codes demand to do so after it has been damaged. With the UK landlord property insurance stats homeowners can better understand the need for acquiring insurance. The code and Ordinances coverage might assist in getting reimbursed for additional charges.
- Burglary: In Leicester, burglary cases constitute about 4.6% of the crime rate. The damage that a rental property experiences during a break-in may be covered by the insurance policy. But in most cases, it will not cover any items stolen from the property. Landlords may add coverage for tools used in the maintenance of the property.
- Vandalism: A house owner might wish to consider purchasing optional coverage that will assist them in paying for the cost of repairing vandalism damage. Unless they purchase vandalism coverage, such as a property manager insurance plan a regular landlord policy will not usually cover the type of damage that occurs to a vandalized property. Any vandalism after the property has been idle or unoccupied for ninety days or longer is not considered.
Other useful links about business insurance:
Business Contents Insurance
Business Building Insurance
Employers’ Liability Insurance
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