Monday, 23 July 2012

Should I use a general insurer or a specialist insurer for my landlord's protection insurance?

This post falls within my Investing in Real Estate series which attempts to cover all aspects of investing in real estate.   Last time I covered all the insurance that you should have as a landlord including home insurance, contents insurance and landlord's protection insurance.

In this post I will weigh the pros and cons of having a specialist landlord protection insurer versus getting the same protection through a large general insurer. 

Pros of a getting landlord protection through a specialist insurer

  • Premiums are generally more cheaper for the landlord protection element of the insurance:  Note that difference is not often significant so this should not be your primary factor in making your decision.  The cost is not relevant if they are not going to cover you in the event that you need them
  • They have a reputation for paying out more often and quicker than general insurers:  Landlords protection insurance is often the core of their business and where they make their money.  They cannot afford to be seen as being unwilling to pay out claims to landlords.  A bad reputation in this area is deadly to their business.
  • You will normally get staff who know what they are talking about when you call:  This again goes to the point of this being their primary business

Pros of getting landlord protection through a general insurer
By general insurer I am referring to those large insurers who offer almost every conceivable form of insurance such as auto insurance, home and contents insurance, life and everything in between.  Although the pros of a specialist insurer for the landlord protection part of your insurance may seem tempting from the pros above there are definite benefits to going with a general insurer including:
  • Ability to bundle all your policies:  I would always get the house and contents part of the insurance with a large general insurer.  They are almost always cheaper and this tends to be what they focus on.  Often they will let you bundle in landlord insurance for not a lot extra which makes it easier to keep track of your policies.  Also in the event something happens I imagine it would be easier to just deal with the one insurance company
  • Confidence that the insurer will be around when you need them: This is purely a size and confidence thing.  You are almost positive that your general insurer will still be around in the event you need them.  Specialist insurers tend to be smaller and leaner and although I have no doubt that they are re-insured and will probably be there if you need them there is a definite 'sleep at night factor' to having a large insurer
  • You can save money on your other policies:  Almost all insures offer discounts if you have more than one policy with them.  Having your landlord policy with a general insurer may get you a discount on your auto insurance.  Note that this is just an added benefit and should not be the primary reason you choose one insurer.

Other considerations

  • Do not insure your house and contents with a specialist landlord insurer: 
    • I have said this above but they do not specialise in this area, the quotes process is often tedious and on a 'case by case' basis and although they may have a good reputation for landlord protection insurer it is often hard to find out what they are like with home and contents insurance
  • Always look at the reputation of the firm you are going with when it comes to paying out claims: 
    • There is no point going with the cheapest firm if they are not going to pay out when you need them.  Look at what other property investors in your area use and google the companies.  Keep in mind that when people write reviews it is because they are unhappy.  It is a weighing process but you will often find interesting information on the policies through other investors' gripes.

What do I do?

  • I use a general insurer (GIO Insurance) for my landlord's protection insurance as well as home and contents insurance.  I have never had to claim (touch wood) though have had several people tell me that when they have claimed GIO has performed really well
  • I appreciated the ability to bundle all the insurance policies and I was happy with all the fine print (don't forget to look for any relevant exclusions - see my post which covers what you should look for)
  • I would not rule out using a specialist insurance policy and see what works for you and your situation
If you use a specialist insurer I would love to hear from you so please comment below.

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