One million landlords at risk of bankruptcy due to lack of public liability insurance knowledge | Discuss

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One million landlords at risk of bankruptcy due to lack of public liability insurance knowledge
09/12/2016
11:46 am
News @ Tenant Referencing
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Following a recent training day for landlords in the south west, it was brought to our attention that that many landlords are unaware of the importance of having a Public Liability Insurance Policy in place.

The NLCE landlord training day took place in November and was hosted by veteran landlord Mary Latham. One of the key areas covered on the 1 day accreditation was the importance of Public Liability Insurance for landlords, which was met with a lot of blank faces.

In recent years insurance companies working on behalf of landlords have noticed a steady increase in claims for injury. And further research over the last month, via a poll of 1,000 new TR Group landlord members, worryingly reveals that 50% of those polled either were not sure whether they had it or did not have it in place at all.

Why is public liability insurance so important for landlords?

Specialist landlord insurance will take care of damage to a property and its contents and rent guarantee insurance provides protection against loss of rent, but what about a tenants’ safety?

Put in simple terms, it’s a form of business insurance covering the cost of legal action and compensation claims. It’s not a legal requirement, but it can protect your business against litigation from tenants.

So the smart, business savvy landlord can protect themselves against costly lawsuits should a tenant or visitor have an accident in the property. After all, a landlord has a particular duty of care to ensure that tenants do not suffer a personal injury, contract a medical condition or otherwise experience any loss in any way connected with their tenancy. And just one claim could easily bankrupt a portfolio landlord.

You may think ‘it’ll never happen to me’ but the following examples show that it could:

  • In 2000 Paul Routledge, CEO of the TR Group, had an insurance claim from a tenant after she fell from a balcony 5 floors up, breaking her pelvis, both legs and incurring serious head injuries. Paul had public liability insurance in place but successfully proved that it had been a direct consequence of illegal drug taking, for which he could not be held responsible, so the case was thrown out of court.
  • The tragic case of the toddler and the fish pond issues a strong warning to parents of young children, as well as illustrating how a property-owner’s liability can be managed:
    – A child who had just started walking accompanied her parents on a visit to a friend’s house.
    The owners had warned the parents of the danger posed by their fish pond.
    The child fell into the pond and despite resuscitation suffered severe and permanent brain damage.
    The father sued for damages.
    Dismissing the claim, the Court held that whilst clearly the owners had a legal duty to take reasonable steps to protect the child from harm or injury on their property, the warning they had issued to the parents was sufficient for them to have complied with that duty. The owners were entitled to expect the parents to supervise their child accordingly. It would place an unfair duty on property owners said the Court, and would discourage social interaction, to expect an owner “to go beyond reasonable means in order to make his or her property safe”.
  • In 2013 a guest of a tenant fell from a set of stairs and claimed that the stairs were not ‘fit for purpose’. Fortunately this landlord in question was protected by his public liability insurance. Full story here.

Mary Latham, veteran landlord and spokesperson for the Midland Landlord Accreditation Scheme (MLAS) said:

“We insure our properties but even if they burned down it’s unlikely to cost more than £150,000 to rebuild most properties. If a person is badly hurt and it’s our fault it could cost £5m in care for life and loss of earnings.

PLI is so cheap and it’s tax delectable, so letting without it is just crazy. I wouldn’t sleep at night if I hadn’t got this cover because I haven’t worked hard all of my life to lose everything because I’ve overlooked something.”

So the question is: can you afford not to have landlord liability insurance?

With a ‘where there’s a blame, there’s a claim’ culture, other than Buildings & Contents and RGI, this insurance is of paramount importance to all UK landlords and should not be ignored.

Please visit RentSafeUK for all your specialist landlord insurance needs.

 

Related topics:

As Home Ownership hits 30 year low, rent guarantee insurance popularity increases

Free online maintenance and repair tracking tool for private landlords

The Times | Implications of not having Rent Guarantee Insurance

09/12/2016
2:38 pm
dimsum
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So does public liability insurance cover me if a tradesman injuries himself whilst doing property maintenance, for example?

09/12/2016
2:55 pm
SamiiB
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Hi Dimsum, thanks for your question.

Landlord liability insurance covers you in the event of the injury or death of any individuals on your property, and also protects you against litigious tenants who may try to sue you following an accident.

Senior PR Officer at TenantReferencingUK.com & Admin at NLCEuk.co.uk .

Any queries email me at:

samii@landlordreferencing.co.uk / samii.boydprice@nlceuk.co.uk or give me a call on: 0800 9994 994 (option 6).

09/12/2016
4:31 pm
Marie B
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Hi

When I obtain contents insurance for a rented flat there is public liability cover of say £5 million included. Is this sufficient for Public Liability Insurance or should be obtain a separate policy?

Thanks

09/12/2016
4:40 pm
SamiiB
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Hi Marie,

If it’s included in your policy then you’re fully covered. We just wanted to bring this to the attention of landlords who may be unaware of the importance of having it.

If you’d like to see if you can get a better quote on your buildings/contents insurance please visit RentsafeUK.co.uk.

Senior PR Officer at TenantReferencingUK.com & Admin at NLCEuk.co.uk .

Any queries email me at:

samii@landlordreferencing.co.uk / samii.boydprice@nlceuk.co.uk or give me a call on: 0800 9994 994 (option 6).

17/12/2016
6:33 am
rigsby
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Am I missing something? When I click on the link for Public Liability Insurance which takes me to the RentsafeUK site there doesn’t appear to be a  Public Liability Insurance product. Is there another link Sami/Paul?

I think Public Liability Insurance is a very important landlord issue to raise. I have a friend who was taken to court because their tenant was burnt with hot water even though it was without doubt caused by the tenants actions. But that didnt matter as they just got one of those scummy ambulance chasing no win no fee “law” firms to do the dirty work.

17/12/2016
7:35 am
PaulBarrett
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rigsby said
Am I missing something? When I click on the link for Public Liability Insurance which takes me to the RentsafeUK site there doesn’t appear to be a  Public Liability Insurance product. Is there another link Sami/Paul?

I think Public Liability Insurance is a very important landlord issue to raise. I have a friend who was taken to court because their tenant was burnt with hot water even though it was without doubt caused by the tenants actions. But that didnt matter as they just got one of those scummy ambulance chasing no win no fee “law” firms to do the dirty work.

Will we have to attach notices to the Hot water taps stating

 

WARNING HOT WATER TAP MAY PRODUCE HOT WATER!!

17/12/2016
11:07 am
rigsby
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OR:

WARNING: LANDLORD CAN GET GRUMPY—-MAY PRODUCE SWEARING

19/12/2016
10:52 am
SamiiB
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rigsby said
Am I missing something? When I click on the link for Public Liability Insurance which takes me to the RentsafeUK site there doesn’t appear to be a  Public Liability Insurance product. Is there another link Sami/Paul?

Hi Rigsby, sorry if it’s unclear – Public Liability is included in the RentSafe Portfolio Buildings and Contents Insurance package.

Senior PR Officer at TenantReferencingUK.com & Admin at NLCEuk.co.uk .

Any queries email me at:

samii@landlordreferencing.co.uk / samii.boydprice@nlceuk.co.uk or give me a call on: 0800 9994 994 (option 6).

19/12/2016
11:11 pm
rigsby
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Thanks for that Sami.

My properties are leasehold flats so the buildings insurance is covered by the block insurance policy which I have no control over. I believe there is a element of liability cover with the block insurance for any issues that happen in the communal areas but not for anything that happens within the flat.

So ideally I need a standalone policy for public liability only, that covers any rental property I own. I dont know if that is possible.   

20/12/2016
6:33 am
PaulBarrett
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rigsby said
Thanks for that Sami.

My properties are leasehold flats so the buildings insurance is covered by the block insurance policy which I have no control over. I believe there is a element of liability cover with the block insurance for any issues that happen in the communal areas but not for anything that happens within the flat.

So ideally I need a standalone policy for public liability only, that covers any rental property I own. I dont know if that is possible.   

You also need sufficient contingency funds to pay the presumed mortgage if the flat suffers loss of amenity to render it unlettable.

If the flat is vacant you will NOT receive any rent or insurance cover

Yes the insurance will pay the repair costs, but there will be nobody to pay the mortgage except you if you can afford to do so.

If you have a tenant then insurance will pay for alternative accommodation costs

However your tenant may decide to seek another tenancy rather than wait months for your one to be repaired, plus they have the hassle of living in alternative accommodation if you can find any!

You CANNOT buy stand alone rent loss cover for leasehold flats

But you can for houses

It is illegal to have 2 buildings policies which with houses is the ONLY way you can achieve rent loss cover in the event of unlettability.

Every flat owning LL faces this risk 

Very few of them are aware of the risk.

Granted it should be a rare circumstance

Happened to me 5 times!!!

I only just avoided repossession via credit cards etc.

Yes my sewage flooded flat was repaired but with no tenant !!

This is why unless you have at 6 months worth of funds it is unwise to buy flats.

I could have been bankrupted by just one sewage flooded flat

Not so with a sewage flooded house!

20/12/2016
8:11 am
rigsby
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It seems you had a very bad run of luck with your properties Paul which just goes to show if it can happen it will/may.

I’m not too concerned over empty periods as I could weather a empty period, it is the public liability cover I  require to protect against any claim by a tenant or tenants guests. In a world of no win no pay law firms encouraging people to try their luck even if the claim has no merit I think it is unwise not to have some protection. 

I am not too concerned about re-housing a tenant in the likely event a property become uninhabitable as I dont believe the landlord has the responsibility to re-house in the case of fire/flood etc though the council will try to argue that you do.   

20/12/2016
8:27 am
PaulBarrett
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Yep I agree with your sentiments about public liability

Yes my luck has been substantially missing since I became a LL

Had I been aware of the insurance risk with flats I would only have invested in houses.

I would willingly pay an additional premium on my block insurance to cover rent loss in the event of amenity problems

Not one block insurance in the UK covers this problem and yet flats are prone to floods etc

The insurance problem for flat owning LL is one that remains hidden from most of them.

20/12/2016
11:34 am
rigsby
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PaulBarrett said

The insurance problem for flat owning LL is one that remains hidden from most of them.

I couldnt agree more.

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