Properties FAQ's

This page lists answers to questions frequently asked by brokers using RSA's SME Property Owners product.

Click on the headings below to go to the relevant section of the FAQ.  

UNOCCUPANCY

RESIDENTIAL TENANCY

OWNER OCCUPANCY

STUDENT OCCUPANCY

LISTED BUILDINGS

MALICIOUS DAMAGE BY TENANTS

LEGIONELLOSIS

IEE

ASBESTOS

OIL HEATING

FINANCIAL LOSS

RESIDENTIAL OCCUPANT

CONTRACT WORKS

ILLEGAL ACTIVITIES

MANDATORY COVERS

  

UNOCCUPANCY

What is your approach to unoccupancy?
This depends on your house, the type of premises, its location, prior claims history and which version of the Properties product that you are using but in general, we will deem the premises to be unoccupied if the ground floor is empty. In common with the rest of RSA, it is not within SME eTrade strategy to insure significant numbers of empty premises, particularly where the unoccupancy is long term, or the building was already empty prior to inception with us. We will accept an incidental proportion of unoccupied premises as part of a portfolio of properties on one policy, provided that they are not in an adverse arson area and have not suffered any claims relating to unoccupancy in the past.

In addition, if the premises are wholly residential, we do not deem these properties to be unoccupied until they are empty for 45 days. At this point, without referral, the policy wording applies a Security & Inspection Condition and defines which events are not insured after this period. Once the tenancy details are updated, a revised rating will not apply mid term. Depending on how incidental these premises are of the total portfolio of properties, you may be asked to contact us to agree additional restrictions if the unoccupancy is likely to be long term.

If the premises are wholly or partially used for commercial purposes, whether you need to contact us will depend on how incidental the empty premises is in relation to the whole policy portfolio and where the premises are. The Security & Inspection Condition applies as soon as the premises are empty. Once you contact us, we will assess how long the property has been empty, when re-occupancy is expected, where the property is and consider what additional measures we would wish to apply.

 

RESIDENTIAL TENANCY

What types of residential tenancy are eligible?
We will assume that all residential tenancies are subject to an Assured Shorthold Tenancy of at least six months or for a leasehold of at least twelve months.

Assured Shorthold Tenancy (AST)

The assured shorthold tenancy is the most common form of residential tenancy in England and Wales. It is a form of assured tenancy with limited security of tenure. The equivalent in Scotland is used to be short assured tenancy. This was replaced for new tenancies in Scotland entered into after 1st December 2017 by private residential tenancy.

Where an AST or equivalent has expired or not renewed, it is often deemed to be a periodic tenancy, we will accept properties that are currently let on this form of tenancy provided that the initial term for the AST was at least six months.​

Private Residential Tenancy (PRT) - Scotland

Unlike the previous short assured tenancy, and current assured shorthold tenancy, the new private residential tenancy has no minimum term and can be open ended, subject to notice periods on the landlord and tenant.

As with the predecessor and equivalents in England and Wales, it is important that some form of regulated tenancy agreement is in force. However, we will not insist on a minimum term and therefore any lack of one cannot constitute a failure to comply with our requirements for tenancy agreements in Scotland that commence or renew after 1st December 2017.

NOTE: Where an AST or equivalent has expired or not renewed and is therefore deemed to be a Periodic Tenancy, we will deem the assumption to be complied with provided that the initial term for the AST was at least six months.

 

OWNER OCCUPANCY

What is your approach to owner occupancy?
This depends on your software house, premises type and which version of the Properties product that you are using but in general, Properties is intended for those wanting rental return from long term property ownership and tenancies. It is therefore not suitable for those owners of residential premises that also occupy most or all of the property. In order to ensure that this is complied with, the definition of Business will not permit more than 50% of any one residential premises insured to be occupied by the property owner.

NOTE: Where the customer is in the name of a residents' association, we will not deem the premises to be owner occupied unless any one member or director of the association occupies and owns more than 50% of that premises.
For wholly non residential premises, provided that the premises is owned by a different legal entity and/or the tenancy is on commercial basis with rent paid and lease or similar entered into, we will accept owner occupancy but will not be liable for losses arising from any trade or business therefrom.

 

STUDENT OCCUPANCY

What is your approach to the provision of cover for student tenants?
This depends on your software house and which version of the Properties product that you are using but in general, we will provide cover for student tenancies but certain cover changes will apply during non-term times.

 

LISTED BUILDINGS

What is your approach to Listed Buildings?
This depends on your software house and which version of the Properties product that you are using but in general, we are unable to establish the listed grade of the buildings with the Industry standard questions for electronic trading. We will therefore assume that all buildings are not of and not being considered for Listed status of anything other than Grade II and equivalent or any other preservation or protected order or status.

 

MALICIOUS DAMAGE OR THEFT BY TENANTS

What is your approach to the provision of cover for malicious damage caused by tenants?
This depends on your software house and which version of the Properties product that you are using but in general, we will automatically provide cover for malicious damage and theft caused by the residents of any wholly or partially residential premises, subject to an additional contribution.

 

LEGIONELLOSIS

What is your approach to the provision of Legionellosis cover?
We automatically provide Legionellosis cover for all quotations that include property owners' liability, up to £5 million or the property owners' liability limit of indemnity, whichever is the lesser.

 

IEE

What is your approach to electrical inspections and IEE certification?
There is a general duty under the Electricity at Work Regulations 1989 that electrical systems should be maintained, “so far as is reasonably practicable”, in a safe condition. The regulations do not specify how this is to be achieved but the accepted practice is to adhere to the Institution of Electrical Engineers Regulations for Electrical Installations. Otherwise known as IEE Regulations. Where we deem that the type of premises is subject to the Regulations, we may make it a condition that the regulations are complied with, otherwise cover may be reduced.

 

ASBESTOS

What is your approach to asbestos and the Control of Asbestos at Work Regulations 2012 (CAWR)?
We will assume that the customer does not hold any form of asbestos licence, carries out visual inspections of their property only and ensures that all asbestos contractors are appropriately licensed and insured.

 

OIL HEATING

What is your approach to oil/waste oil heating?
This depends on your software house and which version of the Properties product that you are using but in general, we will expect that oil tanks over 200 litres are bunded to 110% of their capacity and that any waste oil heater is registered with the local authority and used in accordance with manufacturers' instructions.

 

FINANCIAL LOSS

What is your approach to the provision of financial loss cover?
This depends on your software house and which version of the Properties product that you are using but in general, we do not provide this cover.

 

RESIDENTIAL OCCUPANT

What types of residential occupants are eligible?
Properties is designed for commercial, residential and mixed tenancies, as well as blocks of flats or any combination of these. For residential tenancies, the only types that are ineligible are Bed & Breakfast and Care & Support.

A full list of eligible tenants is available:

Residential Tenant Types
​Asylum Seekers

 

​This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

Properties is intended for those wanting to receive a rental return from long term property ownership and tenancies. It is therefore not suitable for those customers that permit the premises to be used the transitional accommodation of those seeking asylum.

​Bed and Breakfast

 

​This is not to be mistaken for bedsits. A bed and breakfast is a business that derives its income not from the rental return received from long term property ownership and tenancies, but from the short term letting of individual rooms and the possible provision of meals, that may or may not include breakfast.

Because the letting is neither leasehold, an assured shorthold or private residential tenancy, this tenant type is not acceptable.

Some software houses have opted to include AirBnB, internet lettings or similar in their list of tenancy types. The letting of an owners' property through these channels is the same as any other form of bed and breakfast accommodation, whether breakfast or other meals are provided or not.

If the property owner derives their income from letting their property as a bed and breakfast, this is not suitable for a property owners policy. If the property owner has let their property to a tenant, and that tenant then derives income from operating a bed and breakfast, this can be considered in the same way as the letting to any other commercial tenant.

​Bedsit

 

​This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

A bedsit, bedsitter, or bed-sitting room consists of a single room per tenant with all tenants sharing a bathroom. Bedsits are included in dwelling types referred to as houses in multiple occupation (HMO). Bedsits are not to be mistaken for bed and breakfast providers, which are for shorter term lets and include the provision of meals.

Bedsits are generally formed from the subdivision of other dwellings but should not be mistaken for converted flats. A flat is a completely self sufficient unit that provides all facilities, including washing/bathing and cooking, usually in separate areas or rooms. A bedsit will generally not provide washing/bathing facilities within the room and cooking methods may be limited.

If the tenancy meets the criteria for either six months AST or 12 months leasehold and all other eligibility criteria such as construction, claims experience and geo risk are acceptable, a quotation can be provided based on the most appropriate tenant type other than Bed and Breakfast.

Example Response
A house converted into three bedsits with a common bathroom, stairwell and landings. All tenants have a six month AST and none of them are students or in receipt of local authority support. Classify as Private Rental or Residential
  Accept
A house converted into three self contained flats, all with their own bathroom and kitchen but stairwell and landing. All occupants have a tenancy agreement of at least six months with and pay rent direct to the owner or their agents. None of them are students or in receipt of local authority support. Classify as Private Rental or Residential
  Accept
A house converted into three self contained units containing only a bedroom each, with a common bathroom, stairwell and landing. All occupants pay a weekly rate that includes breakfast. Classify as bed and breakfast
  Decline
​Care and Support

This is also called social housing and is intended to provide affordable housing to those in need or struggling with housing costs. Unlike in the private rented sector, where tenancies are offered by the landlord to whomever they choose, social housing is distributed according to the local authority's targets. Social housing is owned and managed by registered providers or social landlords.

These landlords own and manage social housing and tend to be non-commercial organisations such as local authorities or housing associations. Both of these are ineligible and so this, together with the fact that generally these tenancies are neither direct with the tenant, nor under a PRT or six month AST, mean that we will not accept Care and Support tenancies.

​Council Support and Local Authority

 

 

​Because the industry standard for electronic trading does not differentiate the Council Support and Local Authority tenancies between those that are acceptable to us and those that are not, all Council Support and Local Authority tenancies are declined.

Note: Universal Credit replaced the majority of benefits payable in the United Kingdom that would previously have been submitted as Council Support or Local Authority and whilst changes to questions have been debated with Polaris and software houses, there is no agreed revision yet. In the meantime, our evaluation of the tenancy arrangement ignores the funding of the tenancy and how the landlord is paid.

If there is evidence, that can be provided in the event of a claim, that the tenancy is direct between the tenant in residence and the policyholder (landlord), then the tenancy can be reclassified to another, more appropriate residential tenancy type from this list.

Depending on your software house and which version of the Properties product that you are using, a clause is already added to require that all residential tenancies are direct between the policyholder and tenant in residence. Please ensure that you bring this to your clients' attention if it has been applied to their policy.

Decline
​Holiday Homes / Accommodation

 

 

​A holiday home is a business that derives its income not from the rental return received from long term property ownership and tenancies, but from the short term letting of individual rooms or a whole house or flat.

Because the letting is neither leasehold, an assured shorthold or private residential tenancy, this tenant type is not acceptable.

If the property owner derives their income from letting their property as a holiday home or similar, this is not suitable for a property owners policy. If the property owner has let their property to a tenant, and that tenant then derives income from operating holiday accommodation, this can be considered in the same way as the letting to any other commercial tenant.

​House in Multiple Occupation (HMO)

This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

Houses in multiple occupation refers to residential properties where common areas exist and are shared by more than one tenancy within the property. Common areas can include bathrooms and kitchens, but may also be just stairwells or landings. 

HMOs are not the same as purpose-built blocks of flats because an HMO will have originally been intended for sole occupancy and was subsequently converted and/or sub divided. There are differing rights for the various types of HMO tenant as well as differing legislation and licensing that the landlord needs to comply with, depending upon whether they are subject to the Laws of England and Wales, or Scotland, or Northern Ireland. Failure to comply with these will not of itself constitute a breach of policy conditions or give grounds for a claim.

Because of the different tenant types that can be considered as HMO, the specific tenancy and property type should be the classified according to the available options to determine the eligibility.

Example Response
A house converted into three bedsits with a common bathroom, stairwell and landings. All tenants have a six month AST and none of them are students or in receipt of local authority support. Classify as Private Rental or Residential
  Accept
A house converted into three self contained bedrooms, with a common bathroom, stairwell and landing. All occupants pay a weekly rate that includes breakfast. Classify as bed and breakfast
  Decline
A maisonette converted into two self-contained bedrooms, with a common bathroom, kitchen, living room, access and gardens. All occupants are students and share a single tenancy agreement with the landlord for 12 months. Classify as Student
  Accept
An apartment (individual flat) in Scotland with three bedsits, shared bathroom, access and living room occupied by persons placed by the local authority, who are the named party to a renewable twelve month tenancy. Classify as Local Authority
  Decline
​Leasehold ​Within the United Kingdom, there are two main forms of property ownership. Freehold describes the ownership of real property, including land and any buildings built upon it. Freehold interests in the property are transferable to heirs and assigns and may also be sold. Once sold, the previous owner, or freeholder, loses all rights to the property. The freeholder can however, let the property to others and this is generally done by granting a lease and creating a leasehold transfer.

Leasehold is where one party buys the right to occupy land or a building for a given length of time. A leasehold estate can be bought and sold on the open market. The owner of the property, or lessor, will create the lease for a fixed period giving the tenant, or lessee, the right to occupy the estate. Until the end of the lease period the lessee has the right to remain in occupation as an assured tenant paying an agreed rent to the owner as well as in some circumstances additional service or maintenance charges.

Provided that the leasehold tenancy is for at least twelve months, this form of tenancy is acceptable.

​Private Rental/Residential ​This should only be used where all other tenant types do not apply. Provided that the tenancy is an AST for a minimum of six months, or Periodic Tenancy that started with an AST for an initial period of six months, these are acceptable.

Neither of these should be used if the tenant type is more accurately described by one of the other options. The consequences of not doing so means that either the appropriate restrictions in cover are not applied or the rate used is inadequate, or both.

​Sub Lets

​This does not appear in the eTrade list of residential tenancies, nor is there a consistent approach to whether the question is asked but this does not mean that we should not clarify our approach.

We assume that all residential tenancies are on the basis of a PRT, minimum six month AST or twelve month lease, and that all properties are occupied by the tenant and not sub let. Properties is intended for those wanting to receive a rental return from long term property ownership and tenancies. Any tenancy arrangement where the policyholder and occupant of the property are not directly bound by lease or tenancy contract constitutes a sub let.
 
​A prime example being that the freeholder of a property sells a leasehold interest to a another party, who in turn lets that property to a further third party. If the policy is issued in the name of the freeholder and the occupier of the property is tenant of the lessee, then that would constitute a sub let.

The main exceptions to that would be where the policyholder is a residents' association, comprising the owners for the time being of the individual flats within that block and some of those owners have chosen to let their individual flats out or a block of flats owned by a management company. In these situations, we do not deem this to be sub let because the tenant is under a tenancy contract with the notional owner of that flat and issuing the policy in the same of association is a matter of legal convenience.

If the policy is issued in the name of the leaseholder, then we have a direct link between the policyholder and the occupants and would not deem that to be sub letting either.

The additional risks presented by the sub letting of residential premises are the lack of enforcement of conditions with the tenant in residence and remedies available for damage or eviction between the landlord and sub tenant. In this scenario, the greatest risk is present where inadequate vetting takes place by the tenant of sub tenants or the use by the tenant to sub let the premises for social housing with a local authority or other agency. As an insurer, we have no contractual relationship with the tenant in residence, nor the tenant of the landlord so cannot impose terms or make enquiries.

It is therefore in the landlord's interest to ensure that sub lets are not permitted. At least, if they are permitted by the tenancy or lease, then the tenant obtains consent from the landlord and ideally, the landlord can stipulate the nature of sub letting. Where this is not the case, we would ask you to bring the additional risks to your clients' attention and suggest that they or their agents consider how best to reduce them.

If some form of control does exist, then there is no action other than to record this and review whether the tenant type submitted represents the tenant or sub tenant.

For all sub lets, you should draw the Statements and Requirements relating to residential letting and tenancy types to your clients' attention and advise that we will not usually consider variation from these.

​Students ​Student tenancies are acceptable subject to the usual eligibility criteria such as claims experience, sums insured and geo risk. 

Because of the higher claims experience for this tenancy type, additional restrictions are applied. In addition, the standard cover for unoccupancy is amended to reflect the fact that it is more likely to be empty outside of term times.

 

CONTRACT WORKS

What is your approach to the provision of cover for contract works?
This depends on your software house and which version of the Properties product that you are using but in general, we will only provide contract works cover for modifications and minor works to the premises where the customer is required by contract to arrange insurance cover, provided that the original Contract Price does not exceed £100,000.

 

ILLEGAL ACTIVITIES

What is your approach to the provision of cover for illegal activities such as the cultivation of drugs on the premises, without the knowledge of the owner?
This depends on which version of the Properties product that you are using but in general, we will exclude property damage to the buildings and liabilities arising from damage caused by illegal activities at any residential premises insured by the policy, unless and in respect of propogation or processing of controlled substances, additional requirements on vetting and inspections have been complied with.

 

MANDATORY COVERS

Are there mandatory covers? What is your approach to quotation requests for contents only or for contents and property owners' liability without buildings or rent cover included?
This depends on your software house and which version of the Properties product that you are using but in general, the Properties product is intended for the owners of the building, or those with an insurable interest in the building. Therefore, we deem the buildings cover to be mandatory and would not wish to provide a quotation if this was not included. This applies to requests for quotation that only include contents and/or property owners' liability.

Also, whilst Property Owners' Liability is not deemed a mandatory cover by the Industry standard for electronic trading, we believe that it is important cover for all landlords and owners of property to let. Therefore, it will be added to all quotations that we provide for a limit of £2,000,000 but other limits are available.

 

Contacts

SME etrade Team
0345 071 6040
etrading.team@uk.rsagroup.com