One in four landlords are not properly insured

Published on 27th July 2018 by Laura West

A quarter of all landlords do not have the right insurance and so could find themselves out of pocket should they need to make a claim. Buy-to-let investors need the appropriate landlords’ insurance to protect themselves, their properties and their tenants. This is different to a standard home insurance policy, which some landlords have inadvertently taken out instead. This means that any claims made concerning buy-to-lets including the building itself, contents and the parties concerned are left vulnerable should a claim need to be made.

The Simple Landlords Insurance study shows around a quarter of UK residential landlords have taken out a standard buildings and contents policy. Director of Underwriting, Tom Cooper, said this insurance could leave them vulnerable and wide open to injury claims from tenants. Whilst they may believe they are protecting their investments, the policy will not give them all the protection they need to run their business. As an example, landlords will not be covered for any loss of rent or legal fees should they need to evict a tenant. The policy could even be void if the landlord wishes to make any claim. Property is the biggest investment that most people make, particularly when it is also their livelihood, and so it pays to ensure that you are adequately insured. Of the landlords surveyed, only 41% said that they had specialist landlord cover. Incredibly, 3.5% said they did not have insurance at all and a further 4% were unsure whether they had insurance. Another 25% said they had both landlord and the standard homeowners’ insurance policy, which meant they were paying out twice unnecessarily.

Understandably, price was an important factor when considering which policy to choose, with 86% of landlords saying this was an important factor. Good cover was important for 85% of landlords and optional extras such as emergencies or malicious damage by their tenants was important for 70%. It pays to shop around, particularly for landlords with expanding portfolios, in order to get the right cover at the right price. It could be that landlords get a discount for having several properties or they could get all their properties covered on the same policy.

Landlords with specialist software to take care of their administration and back office duties can make sure that the renewal of their insurance policies is included in the app. That way, they will be alerted when it’s time to renew and can check what the policy covers. Mr Cooper advises landlords not to accept any major increase in price which cannot be justified. He added that unless landlords have made a big claim or have made significant changes to the property, then the insurance premium should not rise by more than around 5% year on year. If it has, it could be time to consider a switch. You can get cover for accidental damage, malicious damage by tenants, theft by tenants and contents cover. Tenants should also take out insurance to cover their own contents at the very least.

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