Rental property insurance

By ALEX RAE [email protected]

Alex Rae is Operations Director of British based company Tonic Underwriting, which offers specialist home insurance for anybody owning or occupying property in countries such as Portugal. Tonic takes advantage of EU legislation that allow insurance policies to be sold across borders and are regulated by the Financial Services Authority.

Many homeowners are now looking at their property as a potential source of income and turning to renting their property out. In addition to this, prospective overseas property investors are seeking out bargains and purchasing new homes as income sources.  

What is often an afterthought is adequate insurance and the effect this has. Over 90 per cent of Brits insure their overseas property in the local market and the EU insurance industry is experiencing massive transition through consolidation and increased legislation and regulation. In this context, there is an increasing need for specialisation and focus by insurance providers for overseas home owners in order to ensure the best protection.  

Tonic’s Top Tips help protect your money and property by highlighting where you are exposed.

Using your home to secure rental income could be costly. If you are considering renting your overseas property out in return for income be sure to have cover for public liability. The liability cover for Portugal is often extremely low, frequently in the region of 100,000 euros to 160,000 euros. This would leave you very dangerously exposed as any meaningful claim would exceed this limit.

Loss of rent doesn’t have to mean loss of income. If you have pre-booked lettings agreed and your property suffers damage or fire then make sure your policy can pay for the loss of rentals – even if they are of substantial value and booked 12 months ahead of time. Some providers have a very low monetary value on loss of income and it is unusual to cover significant loss of earnings.

An empty home may mean an expensive home. Overseas property owners not travelling this year could face substantial loss by leaving their home empty for longer than the insurance policy allows. Traditionally, some policy providers allow only a limited amount of time for homes to be empty and will not provide cover should you leave your property empty for longer.

Don’t lose money on the exchange rate. Insure your European properties with a UK based insurer who provide the option of taking insurance in either Euro or Sterling.

Don’t let your insurance premium rise. Change to an insurer who has overseas property insurance as its core and exclusive product. Insurance premiums are less likely to rise in companies that don’t need to offset losses on premiums from other products.

You could be leaking money. Check your policy covers you for trace and access. Metered water is frequently the norm and often payment is taken straight from a bank account. In the event of a serious water leak following damage, this could prove to be very expensive.

Accidents happen at the worst times. Accidental damage is frequently excluded and some insurers are unwilling to offer cover.

Building on your dream? If any building work is required check your insurer is in a position to provide cover for the existing structures to ensure adequate protection. Some policies will frequently not provide cover for this and this is a frequent scenario.

For more information about Tonic Underwriting, please visit