Axa, a leading landlord insurance company, claims hundreds of thousands of landlords do not have adequate insurance.
Their study shows a quarter of landlords have the wrong type of cover because they are relying on standard home insurance instead of specialist landlord policies.
This means that any claims on the policy are likely to be turned down without the chance of the landlord reclaiming any premiums paid.
Many of the landlords at risk are ‘accidental landlords’ who rent out their former home after moving on without taking professional advice about their legal obligations.
The research shows 20% of landlords with inadequate cover had lived at the home and continued to renew existing buildings and contents cover.
Other findings included:
• 43% of accidental landlords did not know they needed specialist insurance for rental properties
• 70% of landlords rent out a single home, and around a third of these are ‘accidental landlords’
• 28% thought landlord and residential policies were interchangeable
• 11% considered landlord cover too expensive and opted for standard home insurance as a cheaper option
The study also revealed other weaknesses in landlord/tenant knowledge:
• 53% have a tenancy agreement
• 27% have an inventory
• 54% take a deposit, but less than half are safeguarded in a protection scheme as required by law
• 73% of landlords have less than £1,000 set aside to cover emergencies, while 18% have no cash reserve
However, the insurer reckons 1 in 20 landlords make a claim against their insurance every year.
Darrell Sansom, of AXA Business Insurance said: "While many of these people may well have never intended to become landlords, the consequences of not sorting out the basic admin and putting some financial protection in place could leave them exposed.
"As an industry, insurers need to take some responsibility to ensure that the right questions are asked when customers are buying insurance. Consumers need to be made aware of the pitfalls of buying the wrong cover.
"Someone else living in your home can present a different insurance risk than the owner living there. Insurance is designed and priced to match these risks so it's important to get the right policy."
