1 in 4 UK Landlords Have the Wrong Insurance

The UK buy-to-let market is currently thriving, however new research by AXA Business Insurance has revealed that thousands of UK landlords have left themselves and their tenants exposed through lack of adequate insurance protection and many have very little financial back up should the worst happen.

Data from the AXA Business Insurance survey suggests that 25% of UK landlords have purchased the wrong insurance product or have no insurance in place at all.

AXA also revealed that many UK landlords had previously bought standard household insurance instead of a landlord insurance policy, leaving themselves vulnerable to having any insurance claims turned down.

AXA believe that many UK landlords with the wrong type of property insurance are “accidental landlords” who have been forced to rent out property because they are not able to sell, or did not originally buy with the intention of renting out the property.

Further investigation of the “accidental UK landlords” who took part in the survey revealed that 20% had previously lived at the rental property address themselves and simply renewed the existing home insurance cover when they moved out, believing it to be adequate.

Of the accidental landlords who responded to the survey

  • 43% were unaware of the existence of specific landlord cover
  • 28% thought landlord and residential cover were the same
  • 11% thought the landlord option was too expensive so bought a residential policy instead.

The research also showed that 73% of UK landlords have less than £1,000 set aside for contingencies or emergencies and 18% have no savings to fall back on, leaving them financially exposed should their insurer refuse an insurance claim due to the landlord having the wrong type of insurance.

One in twenty UK landlords are likely to make an insurance claim in any given year, demonstrating the need to have the correct type of landlord insurance in place at all times. But it appears that it’s not just the type of insurance that is being neglected when it comes to landlords and tenants, as the research also identified other areas where landlords are leaving themselves and their tenants unprotected

  • Only 53% of accidental landlords use a tenancy agreement
  • Just 27% have a current inventory
  • 54% take a deposit, however, less than half of these comply with legal requirements by being kept in a protected scheme.

The number of accidental landlords has grown rapidly over recent years due to the depressed economy and previously stagnant housing market.

AXA believes that around 70% of residential landlords own just one rental property and that up to a third of these are accidental landlords.

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Source: Legal 4 Landlords

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