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Insurer warns landlords of scale of losses from tenant damage

An industry study suggests that landlords without insurance risk are losing as much as 45 per cent of their annual rental income through damage caused by tenants. 

Figures from Hamilton Fraser show that 85 per cent of buy to let landlords have opted for landlord insurance. However, 15 per cent have opted not to insure their portfolios, leaving them susceptible to losses should their property be damaged. 

The average annual cost of landlord insurance in England is £170 per property, which Hamilton Fraser says it some 1.5 per cent of the average annual rental income of £11,228 per property.

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While uninsured landlords do make a marginal saving by not taking out insurance, they risk spending substantially more than 1.5 per cent of their rental income if tenants cause damage to their property. 

The company claims a replacement kitchen would cost almost 50 per cent of a year’s rental income, as would a new bathroom. Even redecorating a one-bedroom flat could cost 10 per cent of an annual rental income.

 

Eddie Hooker, chief executive of the Hamilton Fraser Group, says: “Any rental property is likely to succumb to some level of damage during its lifetime and although this may often be accidental, it can also be the result of a malicious act by a disgruntled tenant, in which case it can be far more costly. 

“We’ve also seen an increase in adverse weather claims in recent years which in many cases cause a great deal of damage. 

“While the vast majority of landlords are insured against such damages, there is a small proportion who run the risk of remaining uninsured or, worse still, under-insured, which is quite astonishing given the relatively low cost of obtaining insurance in relation to the potential bill for damages caused. 

“Even minor damage to their properties is going to cost more than it does to take out an insurance policy and should a major disaster happen, rental incomes can be severely impacted.  A loss that many landlords would struggle to stomach given the challenges with profitability of a buy to let investment following recent and future government policies.” 

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    Is it that landlords choose not to buy insurance or that insurers choose not to insure some properties?
    I'm in the process of getting insurance for several properties. Ideally buildings, contents (for HMOs) and landlord emergency insurance.
    The current building insurer has merged with someone else and now has an impossible website and uncompetitive renewal prices. The current emergency insurer has pulled out of the BTL market completely. I thought I'd found the solution with one company and had got to the fourth property, which is a second floor leasehold flat. They said to be able to buy emergency insurance I would need to take out a landlords fixtures and fittings policy. However, they then wouldn't insure it because of the flooding risk! It's a second floor flat in a seaside town that hasn't had any recent flooding and has spent millions on flood defences over the last decade.

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    I've got all my properties insured (no business can operate without insurance). However, it is a ripoff, there are so many exclusions, any claim will reflect next renewal premium, excesses. In short do not warrant to make a claim. The purpose of these type of reports are scaremongering. These reports should state that the insurances offered to llds do not cover most eventualities. If they do lld has to face with big excesses or exclusion clauses. However on must be insured in any case!

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    I only insure against life changing consequences or whatever mandatory.

    I never insure contents or for accidental damage and go for high excesses to reduce the cost of any essential insurance premiums.

    I reckon I have saved between £30k and £40k in what I would regard as unnecessary insurance costs and could replace everything not insured for much less than what I have already saved over the years.

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