Covered! I
nsurance. A key component of the letting agent’s business, protecting the business, its landlords and its tenants. Insurances that are, to differing degrees, mandatory, advisable and desirable. There are hundreds of choices, dozens
of providers, a confusing range of product names and packages. So how do you find the right insurances for your business? Can you make any money out of them? Should you insist that all your landlords and tenants have some level of insurance cover? Should you arrange insurances for your clients… or should they buy them online? Last month PROPERTYdrum reviewed insurances for tenants; this month we have focused on policies that offer landlords cover for Rental Warranty and/or Legal Expenses and also at Tenant Referencing. We asked leading UK specialist lettings insurers “What is your USP?” In December, the final section, we will look at Professional Indemnity policies.
PROPERTYdrum Lettings Insurances Review
PART 3 Referencing and Rental Warranty and Legal Expenses policies
Rental WaRRanty & legal expenses insuRance pRovideRs
The providers included in this review are, Endsleigh, Paragon Advance, Home & Legacy, Homelet, Leaseguard, LettingRef. com, Letsure, Let Insurance Services, PropertyRisks, Rentguard and Rentshield.
advising landloRds Just to recap; what should you be advising landlords to buy? Well, as we said last month, the first thing to note is that you are not allowed to advise anyone on purchasing insurance unless you are authorised by the FSA or you are regulated by an FSA authorised insurance broker. Your insurance provider will be giving the ‘advice’ element of the transaction through their information packs and most insurers offer support and training to ensure that agents understand the rules on selling insurances.
david scutt endsleigH
Protecting the asset is as important as having the right tenants living there.’
RefeRencing Almost all agents now reference applicants before agreeing a tenancy. It is common sense, it helps to establish that the tenant is who they say they are, it reveals their income, their bank account and financial stability which will indicate whether they can afford the rent (usually). It may also show where they lived before. The level of referencing an agent does is
a matter of choice, there are no legal requirements to do it at all, and some agents take different levels of referencing for different clients, requiring, for example, student tenants to be referenced and to have guarantors, which they also reference. All the questions in a referencing form
reveal useful information and the quality and reach of professional referencing
improves almost weekly; but a reference is only as good as the day it was created, tenants lose jobs, leave partners, get into financial difficulties for a myriad of reasons and no reference can predict this. When the tenant cannot or will not pay
the rent, and/or will not leave the property – that’s when the landlord needs Rental Warranty & Legal Expenses cover. If the landlord is not covered and not receiving the rent, it may not be very long before he is in financial difficulties himself. One of the main reasons that referencing
has become an integral part of the lettings process is that most insurers will not provide rental warranties or legal expenses cover where the tenant has not been referenced. A few insurers require that the landlord/agent uses their own referencing services if they want cover. All the insurers featured in this review require references for
tenants when the landlord requests a rent guarantee policy (not for buildings or
contents policies). They do not usually insist on carrying out the referencing themselves so long as it does by a recognised referencing agent. If the reference is unsatisfactory they may decline cover or, in rare instances, agree cover with increased premiums. Notes: Home and Legacy do not offer a referencing service. Endsleigh also offer, through their agent
partners only, a combined referencing and rent guarantee product. Leaseguard’s Rent Guarantee with Legal
Expenses the tenant must pass a Leaseguard Tenant Reference. Their product is not available if the tenant is in receipt of housing benefit or if the reference is unsatisfactory.
PROPERTYdrum NOVEMBER 2010 51
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