Big drop in insurance payouts relative to landlords’ claims

There’s been a drop in the proportion of landlord insurance claims actually paid out.

Data from Total Landlord Insurance suggests that the drop is as much as one third.

In 2019, landlords submitted insurance claims totalling £2.5m to Total Landlord Insurance, with fire and water damage the most expensive claims. Of this total, £2.1m or 86 per cent was paid out to landlord claimants.

By 2021, however, the picture had significantly changed. The total sum of annual landlord insurance claims rose from £2.5m to £4m while actual insurance payouts remained steady at £2.1m. 

So, while the sum being paid out has remained largely consistent, there has been a sharp increase in the sums being claimed by landlords in the first place. 

The biggest decline in the proportion of claims paid between 2019 and 2021 was related to landlord liability insurance - cover for the landlord in the event that a tenant is injured inside the property.  

In 2019, landlords submitted liability claims of £44,400, some 68 per cent of which was paid out by the provider. In 2021, however, total liability claims rose to £125,500, of which just 8.6 per cent was actually paid.  It’s a similar story with storm damage claims. 

A spokeswoman for the insurer says: “The pandemic was an incredibly difficult time for everyone, not least landlords and tenants. The latter struggled with being locked within their homes while facing genuine concerns about health, income, and careers, while landlords had to grapple with an eviction ban even in the face of growing rent arrears and, in some cases, increasingly poor tenant conduct. 

“The result of which has perhaps been larger claims than they may have made otherwise in order to reset after the impact of the pandemic. However, with extensive measures in place to protect tenants during this period, many landlords have found that the reality of what can be recouped is some way below their expectation, albeit consistent with the pre-pandemic market.”

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