To trust or not to trust. That is the question – Who would you entrust with arranging your property insurance? When you own a property there is plenty to think about and many matters to take care of. From the administration of the finances, rent, tenants, maintenance, to insurance. It’s easy to allow the tenant to choose the insurance they think is fit for the property. However this can be a huge mistake when it comes to claim time and leave you open to great financial risk.

Your most valuable asset

When it comes to what could be your most valuable asset, would you entrust someone you may never meet to insure it? It is never a good idea to allow the tenant to choose the insurance for the property. Of course, they can choose whichever insurer they like for their contents and own goods within the property, however when it comes to the property itself – think twice.
Don’t leave yourself open to financial risk by leaving the decision on how and who to insure with in someone else’s hands. After all, you are financially responsible for the property and will have to bear the costs should an insured event take place. There are many things which can go wrong including but certainly not limited to:
• The tenant may not receive adequate insurance advice, resulting in the property being underinsured. There is potential for a loss to occur which may trigger an underinsurance or ‘average’ clause with the insurer, leading to a reduced claim settlement.
• The tenant could cancel the insurance at any point. You cannot control the actions of the tenant in this regard if you empower them to take the policy out in the first place. The tenant could at any point cancel the policy or they could simply default on payment and not renew the policy. Both circumstances leaving the property completely uninsured which is a direct financial exposure to you, the property owner.
• The tenant may not have all relevant information about the property. This means that they could end up leaving some information undisclosed or not declared to the insurer. For example not disclosing a claim history, providing inaccurate building details, or not informing the insurer of a major change to the risks would render the policy null and void in the event of a claim.

The solution

Leaving the responsibility of insuring your property to the tenant is a flawed approach. As a property owner you should always be in control of your own insurance program. The best way to re-coup the costs of the premium, which is general practice, is to apply the cost to the outgoings payable by the tenant.
Protection of an asset as important as your investment property should not be taken lightly. Leaving the task in the hands of anyone but a qualified professional can have consequences and leave you open to greater financial risk should something go wrong.
The protection of your property should always be undertaken in conjunction with a suitably qualified insurance advisor such as a specialised property insurance broker. If you require more information or advice regarding your property insurance, contact Challenge Insurance Services today and we will be more than happy to help.