Insurers need to be aware that some private landlords are struggling to tell the difference between a standard home insurance policy and landlord cover, meaning properties are being left underinsured.
Consumers letting their properties to individuals require a landlord insurance policy in order for the property to be fully protected. This includes providing cover for risks such as public liability and landlords’ liability even if/when the property is left vacant.
A standard home combined buildings and contents policy would not pay out in the event of a claim of this order, yet at present a significant proportion of private landlords hold this type of cover. As per our 2015 General Insurance Consumer Survey, 35.6% of landlords are covering their second property with home combined insurance. This indicates that many private landlords are underinsured and in need of a change of insurance policy.
Insurers have a key role to play in educating customers about the necessity of purchasing adequate cover depending on the intended use purpose of the property. Quality checks can be implemented at the initial application stage or during the purchase process in order to identify properties that are to be let, and for the buyer to clarify which type of cover is required. This would help ensure the correct product is purchased. And with the recent surge of rented accommodation, especially within inner-city areas, landlord insurance is highly sought-after, and an opportunity nonetheless for insurers to expand their coverage in the UK rental space.
By Thomas McCourtie, UK General Insurance Analyst