UK Landlords Lack Protection

06-Aug-2009

If you are one of the thousands of landlords in the UK without sufficient insurance for your properties, it might be time to consider upping your protection.  New research by Landlord Insurance specialist RedBrick, a division of the Paragon Group of Companies, shows that many landlords are failing to protect their rental properties, and the revenue they make from them, adequately.  71 per cent of landlords fully expect there to be an increased risk of tenants defaulting on their rental payments in 2009, although a shocking 12 per cent of landlords are covered for this in their insurance.

Although it might seem like the cost-effective option to take out a standard home insurance policy - which up to a third of UK landlords have opted to do - there are many areas where this type of insurance will afford you no protection whatsoever.   In the same way that buy to let mortgages are tailored to those who are buying rental properties, landlord insurance is the only cover that provides full cover for legal bills, rental defaults and malicious damage.

Tony Armitage, Redbrick Landlords Insurance director, says: 'Landlords need to carefully consider their insurance needs and ensure that they are properly protected. It is amazing that only two thirds of landlords have specialist buildings insurance, with the other third presumably having a standard household policy or, worryingly, no insurance at all.

'In addition, tenant arrears are on the increase and landlords can easily cover themselves for rent arrears through a rent guarantee insurance product, which also includes the legal expenses involved in evicting the tenant. There appears to be a lack of awareness about the availability of these products and in the current environment landlords should be doing all they can to protect themselves.

'Buy-to-let landlords have sophisticated insurance requirements for which a typical household policy is often unsuitable. The biggest irony is that some landlords are actually paying through the nose for potentially unsuitable cover.'

So what are you missing out on if you are a buy to let landlord with standard home insurance?  Firstly, cover against the house being empty for long periods of time.  Most home insurance policies will cover the property for up to 30 days while the owner-occupier is away, but no longer because of the obvious security risks of having a fully furnished house lying empty.  If you have a couple of months in between tenants or you are carrying out work on the property, it's more than likely that this will happen.  If there is a break-in after the 30-day period, you could be left to pay the costs of repairing and replacing out of your own pocket.

As any buy to let landlord who has had tenant troubles in the past will know, there are a number of things that can go wrong.  A specialist landlord policy will cover you for malicious damage to the property inflicted by a tenant, but the average household insurance policy will exclude this.  If the tenant does not pay their bills, effectively you are left helpless unless you have protection under a rent guarantee scheme.  With protection, you are covered for the potentially extensive legal costs of evicting a problem tenant.  Landlord Insurance will also cover you for legal bills should someone be injured whilst carrying out work to your property, whereas residential home insurance will usually not make the grade in this situation.

Although buildings insurance is usually an essential requirement when you take out a buy to let mortgage, the same cannot be said for landlord contents and tenants insurance, and it is left up to the individual to decide which type of insurance is best.   A buy to let property is such a significant investment that it pays to have the correct level of cover.  If gloomy predictions of tenant defaults are accurate and interest rates do continue to rise, you can at least ensure that you and your rental property are as protected as possible against every eventuality.

Find out more about Landlord Insurance and get a quote today!