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Landlord insurance risks

Landlords should be fully aware of the importance of being adequately insured. I know it’s a pain to shell out loads of ‘dosh’ for something that you will probably never need. You could take the risk and not bother.

I personally have never done it and wouldn’t recommend it either. All your hard work could literally go up in a cloud of smoke.

Read our overview of landlord insurance.

Alan Boswell as one of the most experienced providers of landlord insurance have given us a useful insight into where the biggest risks faced by landlords occur by analysing how the £10 million in claims they paid out last year were attributed.

Fire damage the biggest cost

Fire damage continues to be the most costly category for landlord claims. Fire of course can be expensive in financial terms of cost but the human costs can be devastating, so make sure that you follow the guidance on fire safety in rental property.

Whilst currently there is no requirement for a landlord to have a fire alarm within their property, this is set to change. In October new regulations come into force, that will require the installation of smoke detectors.

The statistics from Alan Boswell make interesting reading for any landlord risk assessing their rental properties. Whilst claims attributed to electrical fires were only 13 out of the total of 2697 claims they accounted for over £680,000 in payments, an average of £52,876, and double that of any other claim type.

Water damage most common claim

According to Alan Boswell’s research, water damage is the most common reason for a landlord insurance claim. This category accounted for 30% of all claims or over 845 individual insurance claims. It is not always clear who is responsible for the repair costs of water damage cases.

Looking at the statistics, an incredible 1 in 20 landlords suffer financial loss due to water damage in any one year. This could be either flooding or the less serious escape of water due to a burst pipe. The former averaged a claim of £13,000, the latter an average pay out of £2,300.

Mother nature is an unavoidable risk

Unsurprisingly, ‘mother nature’ had a significant hand in landlord insurance claim costs. The most significant was through storm damage with Alan Boswell having to pay out on 470 separate occasions with a cost to the insurer of £1m.

Human risks can be managed

Landlords need to be aware of the human aspects that they are at risk from, such as theft or accidental and malicious damage. These categories accounted for over 1,000 claims and another £2 million of claims paid out.

These risks can be managed by a landlord; partly through ensuring that they let to responsible tenants by thoroughly vetting tenants along with regular inspections of their rental property.

The Alan Boswell data gives a useful insight into an average landlords risk profile, however, each of our circumstances will differ. Getting adequate insurance cover is an essential and tax deductable cost to any rental business and as always, we recommend that you shop around to get the best deal.

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