nigeL aTkinson properTy risks
We pay various levels of commission depending on the agent’s involvement, starting at 40% of our net retained income.”
possible – 10 years ago it was a time consuming process, once you had persuaded the client that insurance was a good idea, you had to fill in a printed form (by hand! Imagine!) and fax or post it the insurer. Clients had to pay the premium by cheque or standing order, agents had to send the payments on, commissions had to be calculated, policy documents sent out as hard copy, some time later. Now it has moved on, most of the form
filling is done online, payments collected through bank transfer and commissions paid automatically. The internet has quietly revolutionised insurance sales through agents – many systems allow landlords and tenants to arrange their insurance themselves through the agent’s recommended insurer. The agent receives commission just by ensuring that the applicant either clicks onto the agent’s banner advert on the screen or enters the company’s code onto their insurance application.
LettingRef.com only offers an online service; most others offer on and offline. And the commissions aren’t to be
sneezed at, our respondents pay varying percentage commissions from 15 per cent to 40 per cent, depending on the level of involvement by the agent (see the section on FSA authorisation). Carl Piercy, National Sales Manager at Rentshield Direct says that their Introducers are paid 15 per cent on all new business and renewals, Appointed Representatives and Directly authorised agents are paid 20 per
cent on all new business and renewals. As an example, a four bedroom detached
house in Sussex, valued at £500,000, would attract a premium of £550 per annum. At 20 per cent commission that pays the agent £110, so 10 average detached homes’ building policies a month would net the agent £13,200 in a year – just for Buildings policies, and with renewal commissions paid as well.
LandLord’s BuiLdings insurance This is the big one. The landlord’s building is the most valuable part of his business. If it becomes uninhabitable the financial risk is huge. It is, of course, the landlord’s responsibility to insure the building against all the usual risks – and to make sure that the additional risks associated with a tenanted property, are covered. However, it is in the letting agent’s
interest, and, it could be said, duty of care, to try to ensure that the landlord understands those responsibilities; it is likely that the agent will be the first person that a tenant comes to for help when the roof blows off.
The main secTions of BuiLdings insurance cover: Cost of rebuilding, void periods between lets, loss of rent if the property is damaged and rendered unfit to live in, accidental damage, malicious damage (not always included as standard), public liability and employer’s liability.
michaeL porTman LeT insurance
If your landlord asks why he needs buildings insurance, it’s simple; it’s cover for what you cannot afford to lose.”
Most policies also cover damage to
sheds, garages, walls, gates, fences and driveways. Many landlords and tenants are unclear about what is ‘the building’ and what is the ‘contents’ in insurance terms, along with confusion as to whether the tenant is responsible for damage done to fixtures and fittings such as sanitary fittings. The usual rule is that anything that is a permanent fixture in the building is covered by the landlord’s building insurance. A tenant is not usually responsible for insuring these or the fabric of the building. Buildings insurances should always be
sufficient to cover the total rebuilding costs. The main exclusions of Buildings Insurance policies are: Malicious damage by tenants (if inclusion isn’t stated on the policy) and damage which takes place when the property is empty (Unless within the given policy time limits). Inevitably, there are many levels of insurance cover, dependent on the type of property, the owner’s views and the risks entailed. Home & Legacy is new to the general
lettings market (2008) but have been providing property insurance for years; their speciality has always been the high value end of the market, for ‘individuals of high net worth’. Understandably, their Ultra Landlord policy goes that bit further than the standard version. Mark Wooldridge, Sales and Marketing
Director says it covers landlords buildings, contents, legal expenses, ID fraud protection plus optional cover for rental income protection, “Multiple properties can be covered under one policy and properties let to up to 8 sharers including students and those eligible for local authority allowance can be covered”. At the other end of the scale, they will
also consider cover for special buildings such as Grade 2 listed properties and those of non-standard construction such as thatched houses.
58 SEPTEMBER 2010 PROPERTYdrum
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