Newsletter - January 2007

Make 2007 a Happy New Year and protect yourself and family against risk!

 

In this issue:

Managing Risk

Our lives are inherently exposed to risk from all angles. The level and nature of that risk will be determined by the activities in which we are involved, but it is impossible to be totally risk free - there are other forces and situations, over which we have little control, that could and do have a direct affect on our lives.

Managing risk is an important part of our lives. Individuals may not set out to have a defined process to do so, as opposed to organisations that may develop sophisticated Risk Management functions. Whatever, there are four key steps to follow:

  • Identify the nature of the risk
  • Quantify the risk
  • Respond to the identified risk
  • Manage the risk

For example, if you let out property one risk you will have is the risk of default by tenants. If we follow the above model then the following steps may be taken:

  • Risk of potential default by tenants is identified.
  • Quantified by the number of months of potential loss of rent, legal costs and re-letting fees.
  • The response may be to insure for loss of rent and legal costs in the event of a defaulting tenant. Alternatively the response may be to simply accept the risk as it stands and make provision in budgets for such losses.
  • Management of the risk could be by ensuring all prospective tenants are fully referenced and vetted, hence reducing the risk of default. Robust monitoring of rental payments and timely action on late payments also helps negate potential losses.

Many risks can be minimised by insurance or by taking appropriate steps to manage the risk. This newsletter provides some solutions for certain risk areas.

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Protect Your Assets

Protecting your property investment against risk cannot be over emphasised and it is critical to ensure you have the correct cover in place for the right situation.

Landlords need buildings and contents insurance specifically designed for property that is let out as it carries a different risk profile to that covered by an every day household policy. Failure to have the right insurance in place will mean you are not covered in the event of loss.

You can even extend the landlords cover to include emergency repair insurance and manage your risk and costs arising from certain emergency situations.

And what about properly assessing potential tenants?

  • Do you manage your own property portfolio or do you have clients that manage matters for themselves?
  • How can the risk of default by a tenant be minimised?

The number one worry for landlords is bad tenants.  Having a comprehensive tenant assessment, which checks references and credit history is a must. Done properly this then enables the landlord to effect rent insurance to protect against the risk of default by the tenant.  Let us carry out your tenants referencing work and arrange rent insurance for peace of mind.

We have agreed competitive insurance arrangements with Endsleigh Insurance Services and have set up a new affiliate scheme linked to our website.  Glenn Hanson, Managing Director of Specialised Investment Property Services has used Endsleigh for insurance of his own property portfolio.

By clicking on the relevant website link, access can be gained to policy details,
on-line quotes and implementing cover, for any of the above.

Check out our arrangement with Endsleigh Insurance Services, it may save you in more ways than just some money on the premium!

 

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Protect Your Health

Why do I need travel insurance or healthcare cover if I am travelling or living in another EU country? Surely my E1.11 covers me?

Well does it? The following case should make you think again:

David was working and living in Spain with his wife and two small children, a 2-year-old boy, Greg, and a 3-month-old girl, Alex.  They initially moved to Spain on a six-month basis so never thought of health insurance or registering with a local doctor.  Due to the cost of flights, they planned to return to the UK each month to visit family and to see their UK doctor to provide Alex’s vaccinations.  Only being there for six months, they felt that it was not necessary for any other cover except their E1.11. 

One day, however, Greg, being a typical 2-year-old boy, had climbed up onto a chair.  He lost his balance and fell onto the floor, hitting his face and biting through his tongue.  Greg was immediately taken to the local hospital but instead of being helped, they were faced with staff that spoke very limited English, and what they could understand was that staff weren’t able to look at Greg because he was under 3 years old.  In his anguish, David called his sister in the UK and asked her to call the NHS Direct help line for advice.  The sister was told that they could only give advice to UK residents and that her brother should call his health insurance provider.  

Eventually, Greg was treated at another location.  However, having to deal with a small child with a mouth full of blood and screaming at the top of his lungs was enough to ensure that, next time around, health care insurance would be a top priority.

Having a properly structured Healthcare Plan for those working and residing abroad is a must. If you are simply travelling abroad regularly, maybe with more than one home in the EU, then comprehensive annual multi-trip travel insurance is a necessity.

SIPS have agreed an affiliate scheme with alc, International Health Insurance to provide comprehensive travel insurance and healthcare products at competitive premiums. You can check out the policy details and apply on-line using the link on our website. a la carte healthcare will be pleased to provide any advice that you need.

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Protect Your Identity - Guide for Landlords

There is increasing concern with identity theft. Over half of identity theft victims are property landlords where criminals use the landlords name and the rented property’s address to apply for loans etc.  Most of the loan offers that come through your door are part filled in, it is easy for anyone to apply in your name!

Mortgage Express, in their B2L magazine gave some useful tips on how landlords can protect themselves. This is replicated below:

  • Have your post re-directed when you move out of a home you are going to let. Even junk mail can help a fraudster steal your identity.
  • Make sure you get references from your tenants to ensure they are genuine. SIPS can help you in this respect.
  • Register with the Mailing Preference Service at www.mpsonline.org.uk to have your name removed from most direct mail lists. This should help stop mail shots from credit card companies, for example, going to your former home.
  • Tenants are also at risk and fitting secure mailboxes to each flat in a shared property can help protect them. It may also be a good idea to join a credit monitoring service to alert you of any significant changes to your credit report so that early action can be taken if necessary.

Many financial institutions are now offering cover to customers to provide protection in the event of identity theft; this includes obtaining a credit check to see if there are any unknown debts and liabilities recorded against you.

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Protect Your Family

Often investors building a property portfolio neglect to think about protecting their families from debt in the event of an untimely death.

  • Who will pay off the mortgages?
  • Will the dependents left behind be able to complete on already contracted purchases?
  • Will asset value be diminished by the need to sell property quickly and below the true market value?
  • Will rental income be lost at a time when it is needed most?

Basic life assurance can be arranged very competitively and SIPS have linked with Life Direct to provide you with competitive quotes, and advice where needed. Indeed it may be a good time to review your current arrangements and be able to save yourself money compared to existing premiums being paid – life assurance premiums are constantly being reviewed and the market is extremely competitive at the present time.

It may also be possible to protect yourself against critical illness and again Life Direct can assist you in this respect.

Get a quote now…. you may be surprised how inexpensive it is!

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Happy New Year

May I take this opportunity to wish everyone a very Happy and Successful 2007!

This newsletter has focussed on the need for protection and managing risk. Protecting hard earned assets displays prudence as does ensuring families are protected in the event of untimely death. Make sure 2007 is a happy year and not marred by un-insured losses when protecting ourselves can be very cost effective.

SIPS has created affiliate relationships to provide competitive premiums in a number of areas. Click on the links below to check these out and get a quote: 

Finally, a date for your diary. We are planning a seminar to be held on 28th February 2007, entitled Overseas Property Investment – Considering the Options. We want to give private clients the opportunity to attend this seminar, as well as professional advisers, and therefore timing will be around early evening. Exact details, including venue, will be issued shortly, but we expect the location to be close to Stratford upon Avon.

Happy New Year!

Glenn Hanson

Managing Director, SIPS Ltd

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