Landlords that make insurance claims could see the cost of their cover increase by as much as 20%, even if it is for a small amount, due to the loss of their no claims discount, according to Cover4LetProperty.co.uk.
The let property insurance specialists report that 20% no claims discount is routinely deducted from the cost of the annual premiums as soon as a claim is made.
Richard Burgess, director at Cover4LetProperty, explained: “With our policies - and typically some of those offered by other providers too - a 20% no claims discount is automatically deducted from the cost of the annual premiums.
“In the event a successful claim is made on a policy, however, then at renewal, the new cost will not include the no claims discount – meaning the premiums will appear to increase quite dramatically.”
Cover4LetProperty offered the following example:
+ A landlord makes a small claim for £200;
+ The claim is approved, and the landlord receives £100 from the insurer (as the policy has a £100 compulsory excess amount);
+ At renewal time, the cost of the cover may typically have increased by around 20% (due to the loss of the NCD). With the average annual premium amount being £208*, this means that the new annual landlord insurance cost may typically be £249.60;
+ After that, the landlord will need to rebuild their no claims discount back up over the years.
Burgess commented: “In the long run, landlords could end up paying out a lot more for the cost of their cover than if they had not claimed for a small amount. We suggest that in the event of a claim, in the first instance you contact your broker, as they will be able to advise on the next steps.”