Insurance

Question 1

Explain how you go about arranging insurance for a Landlords portfolio?

Answer 1

• Check the leases for each of the Tenants within the portfolio to advise the client of the perils that need to be included when obtaining insurance, e.g. fire, flood, theft, earthquakes, malicious damage.
• compile a statement of insurance to be sent to the insurers confirming all relevant information including any material circumstances.
• statement includes details of the tenants, occupation of the property, building construction etc.
• Provide the information to the insurance brokers and obtain quotes
• review the quotes obtained to ensure they are on a like-for-like basis and then set up the insurance that is the best value.

Question 2

How do you ensure that the policy cover limit and insured amount are appropriate?

Answer 2

• ensure all perils are covered under the lease.
• consider any other perils that may be appropriate given the circumstances, e.g. terrorism etc.
• have a reinstatement cost assessment undertaken every 3 years.
• reassess the building reinstatement cost on a regular basis with an annual adjustment to reflect inflation
• inform the insurers of a lease renewal and rent review to ensure the loss of rent covered is the correct amount.

Question 3

What are the elements comprising property insurance?

Answer 3

• Statement of insurance
• Insurance schedule
• Policy wording and details of cover
• Perils insured, premium and details of any endorsements (an amendment to an existing insurance contract that changes the terms of the original policy)

Question 4

What are the terms and factors you consider when obtaining quotes for insurance policies?

Answer 4

• Check they are on a like-for-like basis
• Consider any other adverse impacts on the client, e.g. high excess, vacant unit inspection requirements etc.

Question 5

What are the regulations governing the placing of insurance policies?

Answer 5

The Insurance Act 2015 places a “duty of fair presentation of the risk” on all commercial customers.

Question 6

Talk me through how you would deal with an insurance claim from start to finish?

Question 7

What insurances would you ensure are put in place when arranging insurance on behalf of landlords of commercial property portfolios?

Answer 7

• Reinstatement cover for their buildings
• Loss of rent cover
• Public Liability for injury to members of the public on their premises

Question 8

When would an RICS firm need to be registered with the Financial Conduct Authority?

Answer 8

Any firm that conducts general insurance distribution work.

Question 9

What are the additional requirements of firms that conduct general insurance distribution work?

Answer 9

• Must be registered with the Financial Conduct Authority
• The minimum levels of indemnity are replaced with the equivalent to at least €1.25 million for each and every claim and at least €1.850,000 in the annual aggregate.

The PII must cover any claims firms may face, and if
undertaking cross-border insurance distribution activities, this must include cover for activities into, or from, territories outside of the UK.

The cover requirement applies when the policy is taken out, renewed or extended.

Question 10

What is the RICS recommendation on how often a reinstatement cost assessment is carried out?

Answer 10

• Reassess the sum insured on a regular basis, with an annual adjustment to reflect inflation
• Major review and reassessment every three years, or earlier should significant alterations be made to the insured property.

Question 11

What are the standard perils of loss or damage?

Answer 11

• Fire
• Aircraft
• Explosion
• Storm and Flood
• Earthquake
• Escape of Water
• Impact
• Riot and Malicious Persons
• Theft,
• Accidental Damage
• Subsidence

Question 12

What do you do to protect your client in the event of a major loss.

Answer 12

• Ensure that I am fully transparent with insurers about the property and occupation etc to ensure the appropriate cover is put in place.
• Advise the insurer of any material circumstances as and when they become apparent to ensure that appropriate adjustments can be made to the level of cover.

Question 13

What is a material circumstance?

Answer 13

Something that would influence the judgement of an insurer in deciding whether to insure the risk and on what terms, e.g. if the property became vacant - advise the insurer.