Landlords Insurance Shop Around for Buy to Let Insurance Plus a Look at New Markets for Landlord Insurers

Insurance is an area where competition is rife in the private rented sector. This means it is an area where landlords should be shopping around.

But it is also a product where the providers of insurance should widen their marketing activity too as they could easily open up new markets.

For landlords in the private rented sector, the two big insurances are property insurance and rent guarantee insurance.  Often bundled together, rent guarantee insurance is often included along with property insurance, though landlords can opt to add it as an optional extra, delete it and save on premium or choose to buy it separately from another provider.

My top level advice for landlords is to always shop around for insurance. Both the main insurances are very competitive and it is so easy to shop around on line and get a better deal.

Indeed, you can see how much money there is in landlords insurance and just how competitive it is when you know that there is one major building society that sells it through its branches but which does not actively market its buy to let mortgages at branch level. And there is a big direct insurer that now offers it but also doesn’t sell mortgages.  To me this indicates competition is rife.

Getting a Good Deal

So, how do landlords get a good deal?

As a minimum, landlords should not just accept the property insurance that comes with their buy to let mortgage from their mortgage company. I have usually found that better (or at least equivalent cover) is available from insurance brokers at a cheaper price than is available from mortgage lenders.

Portfolio landlords should also aim to get all their properties on the same renewal date as by doing so, not only will it save them valuable time when it comes to renewing, but they will also be able to get a much better rate from an insurance broker. Any broker will be only too pleased to cut a good deal with a landlord who offers him a batch of properties all renewing on the same renewal date.

It is important to also check what level of cover you need and don’t need and when comparing policies always check you are comparing like with like. For example, there is no need to pay for lots of contents cover if you don’t supply a fully furnished property. Get a quote for a buildings policy with just a small level of contents cover, or even none, if you let unfurnished.

If you insure through your mortgage lender, you may find that they have basic policies that include a certain level of contents cover as standard – so in this scenario it might be that you are paying extra for something you don’t actually need. And think about what level of excess (or deductible) are you happy with. Again, check you are comparing like with like when comparing different offers.

If your tenant checks are very good and you have never had a bad tenant do you really need to pay for rent guarantee insurance or for malicious damage cover?  Remember, stand alone rent guarantee insurance is not cheap and also not usually available for tenants who don’t pass muster on tenant reference/ tenant scoring checks anyway.

Advice for Insurers

At LettingFocus, we think that insurers who sell rent guarantee insurance and damage insurance / bonds are missing a trick in the private rented sector where they could do lots of business with local authorities.

Local authorities are looking for bonds and insurances to guarantee against claims made against “LHA Tenants” that they have placed in the private rented sector with private landlords.

In our consultancy work with local authorities, we advise councils on “private rented sector access schemes” or “social letting agencies” – basically advising councils on how they can find and keep private landlords who are prepared to let to people who present themselves to the councils as homeless or in danger of being homeless.

In this area, we see a big market for this type of rent guarantee insurance. Many local authorities choose to self insure this property risk for a variety of reasons, but the commercial insurers who underwrite this type of risk are missing out on a big opportunity to make their products available to the councils.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO is the home of Private Rented Sector expertise and Landlord Information and I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold.

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Primarily we are  consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them with their landlord facing or buy to let product strategies, marketing and services.

This work includes helping banks improve their buy to let mortgage lending practices and helping housing associations / local authorities procure supply of properties from private landlords (private rented access schemes, local letting agency models etc.)

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We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Information on a coaching basis or through our (very occasional) group seminars.



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