Professional Fees Insurance

Who offers professional fees insurance? There are four main providers of cover in the UK. These are Abbey Tax, Professional Fee Protection, IRPC and Peninsula. What is covered by it? Either the insurance company will appoint a representative to act for the taxpayer in the event of an investigation or inquiry or it will pay up to around Pounds 75,000 towards the cost of the accountants' time instead of representation costs.

What is not covered? If the tax return has been submitted late, or if a case is investigated by the HMRC's Special Compliance Office which looks at fraud, then claims will not be covered. In other words insurance will be void if you set out to dodge tax in your return. How much does this insurance cost? To buy this type of insurance cover on a one off basis, you can expect to pay about Pounds 80 to Pounds 100 annually. However, it will depend on whether you buy separate cover or through your accountant.

For cover from Professional Fee Protection, which often sells many policies through one firm of accountants, it could cost between Pounds 40 and Pounds 120, depending on how many other people take it out through the firm of accountants that does your tax return.

Is there an excess to pay? "Full" inquiries tend not to trigger an excess but "aspect" investigations could cost the taxpayer the first Pounds 80-Pounds 150 of a claim. Is it worth it? That will depend whether you face an investigation or not. The average cost of a Revenue investigation is Pounds 2,500 but it could cost a lot more or a lot less than that depending on how complicated your affairs are.

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Save on Second Home Insurance

Holiday home and investment property owners can save up to 50 per cent on buildings and contents insurance by shopping around, according to a sample survey conducted by The Sunday Business Post. For example, insurance premiums ranged from EUR646 (Axa) to EUR441 (FBD) per year for a three-bedroom holiday home in Dunmore East. The only snag is that most insurers will not quote for buy-to-let or holiday properties on a standalone basis.

Real estate owners will also have to switch their home insurance policy to the same underwriter, in order to avail of the more competitive rates. However, this could be a profitable exercise for multiple property owners, as average house insurance rates have fallen by about 5 to 10 per cent in the past year, according to Hibernian. A home insurance survey conducted by the Irish Financial Services Regulatory Authority (IFSRA) in August, revealed price differences of up to 50 per cent between insurers. If you're lucky, you might be able to more than halve your annual insurance bills by shopping around.

Surprisingly, online broker www.123.ie is the only provider of standalone investment and holiday home property insurance in the survey. "We're in a more competitive position than last year, when Eagle Star used to quote on a standalone basis. We negotiated an exclusive deal with Allianz," said Derek Richardson, chief executive of Richardson insurance and 123.ie.

Many people seem to consider shopping around for house insurance only when their renewal letter arrives by post. But, for property owners who are inundated at that time, the good news is that you can shop around and switch insurance providers at any stage. Naturally, this assumes that you pay your bill monthly by direct debit and not via an annual lump sum. Is there a large difference between insurance costs for family homes and other properties?

Property owners will be interested to learn that it costs about 25 per cent more to insure a buy-to-let property than it would to purchase cover for an identical family home. As one might expect, the insurance risks with rental properties are significantly higher than owner-occupied homes. Students who throw parties and irresponsible tenants don't have impressive claims histories.

The fact that holiday homes will cost about 50 to 70 per cent more to insure than an identical family home might also cause surprise. The reason for such price differentials is the claims record. Statistically and unsurprisingly, owner occupiers take better care of their properties. Holiday homes, which are visited in the summer and abandoned during the winter, might experience burst water pipes during freezing weather, as they are unattended for long periods. Fire damage and break-ins are higher on the risk list than for a family home or an investment property.

Intermediaries say that underwriters of investment properties prefer families as tenants, as they are statistically a better claims risk. In reality, a large proportion of tenants will be singles or couples but if you can rent to a family, actuaries can prove they are usually better tenants. What about property cover for apartment owners?

Some insurers steer clear of properties held for residential letting and those who do quote will often only cover buildings and contents as a package and not in isolation. This becomes unnecessarily expensive for apartment owners, as their buildings insurance is often included in monthly service charges.

Tip
Landlords can overcome this problem by locating the insurer who underwrites the building, as the insurance typically covers the contents as well. Only a quarter of all investment properties are apartments (according to Bank of Ireland data) but there are many landlords who rent houses. The insurance industry has entered a more profitable phase and, as a result, there is increased underwriting capacity being offered industry-wide. Property owners can hope that increased profits will attract more entrants to the market and produce keener pricing as a result.

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When a Bolt Hole Comes at a Premium: Holiday-Home Insurance

Finding building and contents insurance for a holiday home can leave you needing a good holiday. Most UK insurers will not provide stand-alone policies for holiday homes. Overseas properties and those let out to tenants for part of the year are especially difficult. The best option in many cases is to turn to the insurer that covers your main residence. Failing that, specialist brokers and insurers may be able to help.

Ray Boulger, technical manager at independent financial advisers John Charcol, says: "In most cases, it is advisable for someone to get insurance for their holiday home with the same company that provides insurance for their main residence. Insurers see bigger risks with holiday homes because they are often left unoccupied for long periods."

Richard Lowe, general insurance co-ordinator at independent financial adviser Savills Private Finance, adds: "Premiums for stand-alone policies for holiday homes are likely to be 20 to 30 per cent higher than premiums for main residences because insurers perceive greater risks. Policies that cover the holiday home and the main home jointly are cheaper because the insurer also has the better part of the risk, from the main residence."

Boulger adds: "For most people, the most important thing is building insurance because they do not have expensive contents in their holiday homes. If you want contents insurance for the holiday home, it would be a good idea to install an alarm - that could reduce the cost by up to 10 per cent." It is vital that you look at the small print for holiday-home insurance, because it usually contains more restrictions than main residence policies.

Lowe says: "Some policies for holiday homes have a specific exclusion for burst pipes between September and March. The central heating must be left on permanently between these months or the heating must be turned off and the pipes drained."

"If the property is rented out, there could be a restriction for theft by tenants. Some policies only cover for violent or forcible entrance or exit by a burglar. Many policies also exclude accidental damage by tenants. It is very rare to find insurance that covers burst pipes, general theft and accidental damage by tenants." Holi day-home policies may not cover the property if it is unoccupied for more than 30 consecutive days. Insurers may insist on someone visiting the property every week and on special locks being installed.

However, insurance broker Schofields will cover for most eventualities. It has a range of stand-alone holiday home insurances, Schofields Holiday Homes Schemes, underwritten through Lloyd's of London. David Gaskell, its administration manager, says: "Most policies exclude for theft, accidental damage or burst pipes but ours do not."

Schofields can also arrange policies for holiday homes in France, Spain, Italy and the Republic of Ireland. Gaskell said premiums for holiday homes abroad can be more than a quarter higher than in the UK because there are often additional types of taxation. For example, in France taxes for natural catastrophes, fire, other perils, and victims of terrorism have to be added. Hiscox, a specialist high net-worth insurer, will cover holiday homes in the UK and continental Europe, although it prefers to cover the main residence as well as the holiday home. Its policies are only available through insurance brokers.

Shane Colvin, an underwriter at Hiscox, says: "The advantage of coming to us is that we provide worldwide all-risks cover for the main residence's contents. This means that if you have a piece of furniture you really like you can take it to the holiday home and it will be covered while you stay there. However, if you want to leave it there permanently, you would have to take a separate holiday-home policy."

Colvin warns that those with holiday homes abroad have to be particularly careful about the small print. For example, Hiscox's policies do not usually cover for earthquakes, subsidence or accidental damage (although this can be added). Insurance underwriters Towergate Holiday Homes will provide stand-alone policies for holiday homes virtually anywhere in the world, although its policies are only available through insurance brokers. Colin Birch, its managing director, says: "We can provide cover in any territory that allows us to do it. We would not be able to do it in Afghanistan, but I don't think many people have holiday homes there."

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